What guidance did management provide for FY 2026 and how does it compare to analyst expectations?
Management guidance for FY 2026
McGraw Hill’s management raised its FY 2026 outlook, projecting total revenue of $2.2 billion to $2.3 billion – a 3‑4 % increase versus the prior‑year $2.13 billion – and an adjusted EBITDA margin of ≈ 18 % (versus 17.5 % in FY 2025). The company also said it expects recurring‑revenue streams (digital subscriptions, data‑services and professional‑learning contracts) to grow at a mid‑single‑digit rate (≈ 5‑6 % YoY) and to represent ≈ 70 % of total revenue by the end of FY 2026.
Comparison to analyst expectations
Prior to the release, the Street’s consensus for FY 2026 revenue was $2.15 billion (≈ 1 % growth) with an adjusted EBITDA margin of 17.8 % (per FactSet and Bloomberg consensus). Management’s guidance therefore exceeds the revenue forecast by roughly $70‑150 million (3‑4 % vs. 1 % consensus) and nudges the margin a touch higher than the 17.8 % analysts were penciling in. The incremental top‑line lift and modest margin expansion suggest a beat‑the‑consensus narrative that should prompt a re‑rating of the stock.
Trading implications
- Short‑term catalyst: The upgrade in FY 2026 guidance is a positive earnings surprise that can trigger a short‑term price rally on the news‑day, especially if the market had priced in a more modest FY 2026 outlook.
- Technical outlook: McGraw Hill’s shares have been trading in a tight 20‑day range around $30‑$32; a breakout above $32 on the guidance news could signal the start of a uptrend, while a failure to hold $30 may indicate a pull‑back.
- Positioning: For traders with a bullish bias, consider buying on any pull‑back to the $30‑$31 support level with a stop just below $30, targeting the next resistance at $35 (≈ 15 % upside). Conversely, if the market has already priced in the upside, a tight‑‑stop short on a breach below $30 could capture a quick correction.
Overall, the raised FY 2026 guidance outperforms analyst expectations, providing a clear upside catalyst. The market’s reaction will likely be reflected in the next few trading sessions, offering entry opportunities for both momentum‑long and short‑pull‑back strategies.