ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. McGraw Hill's annualized return on capital (ROC %) for the quarter that ended in Mar. 2026 was 2.25%.
As of today (2026-06-27), McGraw Hill's WACC % is 7.47%. McGraw Hill's ROC % is 4.52% (calculated using TTM income statement data).
McGraw Hill earns returns that do not match up to its cost of capital. It will destroy value as it grows.
McGraw Hill (FRA:1LI) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, McGraw Hill's WACC % is 7.47%. McGraw Hill's ROC % is 4.52% (calculated using TTM income statement data).
McGraw Hill earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
McGraw Hill ROC % Related Terms
McGraw Hill ROC % Historical Data
* Premium members only.
The historical data trend for McGraw Hill's ROC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
McGraw Hill (FRA:1LI) has a ROC % of 2.25% as of Mar. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on McGraw Hill and its competitors.
Is McGraw Hill's ROC % too high?
McGraw Hill's current ROC % is 2.25%. The Education industry median ROC % is 5.00. McGraw Hill's value of 2.25% is 55% below this industry median. Overall, McGraw Hill has a GF Score™ of 31/100, reflecting its overall financial health beyond just this single metric.
How does McGraw Hill's ROC % compare to UTI and PRDO?
McGraw Hill's ROC % of 2.25% can be compared against companies in the Education industry. The industry median ROC % is 5.00. McGraw Hill's value of 2.25% is 55% below this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for an Education company?
The median ROC % among Education companies is 5.00, based on 261 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. McGraw Hill's current ROC % of 2.25% is 55% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on McGraw Hill and its competitors. For the Education industry, the median ROC % is 5.00 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. McGraw Hill's current ROC % is 2.25%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is McGraw Hill stock overvalued right now?
McGraw Hill (FRA:1LI) has a current ROC % of 2.25%. The current ROC % is 2.25% and 55% below the Education industry median of 5.00. McGraw Hill's overall GF Score™ is 31/100 with 3 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For McGraw Hill (FRA:1LI), the current ROC % is 2.25% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
McGraw Hill Inc is a provider of education solutions for K-12, higher education and professional learning markets. It is helping shape the education industry by providing access to effective learning experiences that improve outcomes and opportunities for all. It operates at the intersection of proprietary content, software and data, using artificial intelligence to deliver personalized learning experiences, driving positive outcomes throughout the entire learning lifecycle. The company has four reportable segments K-12, Higher Education, Global Professional, International. It generates majority of revenue from K-12 which provides end-to-end core, supplemental and intervention curricula to support the needs of U.S. K-12 schools. It generates majority of revenue from United States.
31GF Score
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