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McGraw Hill, Inc. (MH) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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McGraw Hill, Inc. (MH)

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Intrinsic Value (DCF)

Current$14.81
→
Intrinsic$59.37
+301%
$35.68$59.37$104.35
Market implies 1% growth for 5 years
DCF analysis suggests MH could have 301% upside at 20% growth — verify assumptions match your view.
At $15, the market prices in only 1% growth — below historical 20%, suggesting low expectations.
Range: Bear $36 → Bull $104. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →16%18%20%22%
8%$76$83$91$100
10%$49$54$59$65
12%$34$38$42$46
14%$24$27$31$34

Bull Case

  • Bull case ($104) offers 605% upside at 24% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($36) with 16% growth, 12% discount rate
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5-Year Free Cash Flow Projection

Year 1$582.27M
Year 2$698.72M
Year 3$838.46M
Year 4$1.01B
Year 5$1.21B
Terminal$17.77B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$485.22MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is MH stock undervalued or overvalued?
🟢 UNDERVALUED

MH trades at $14.81 vs. our DCF-derived intrinsic value of $59.37, implying +300% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of MH's future cash flows. The bear case ($33.78) still suggests upside, providing margin of safety.

What is MH's intrinsic value?

Using a 5-year DCF model: Base FCF of $485M, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $2.87B net debt and dividing by 0.19B shares: Bear $33.78 | Base $59.37 | Bull $97.05. Current price $14.81 implies +300% to base case.

How is MH's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($14.20B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.