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On Feb 19, 2014 we issued an updated research report on McGraw Hill Financial, Inc. (MHFI - Analyst Report). Ever since McGraw Hill posted better-than-expected fourth-quarter 2013 results and provided an upbeat guidance for 2014 (on Feb 4), the Zacks Consensus Estimate has been trending upwards. Stellar performance across all segments except the Standard & Poor’s Ratings Services was the driving factor. Further, since the earnings release, the stock has garnered a return of nearly 4.7%.

The company’s top and bottom lines of $1,250 million and 81 cents easily surpassed the Zacks Consensus Estimate while rising 2% and 12% respectively, year over year. Following the strong performance, McGraw Hill now projects adjusted earnings in the range of $3.75–$3.85 per share. Further, the company anticipates revenue growth in mid single digits in 2014, and is likely to generate free cash flow worth $1 billion.

Consequently, for 2014, the Zacks Consensus Estimate has moved to $3.80 from $3.76 and for 2015, it has risen to $4.30 from $4.27, over the last 30 days.

Further, McGraw Hill is an attractive pick for investors seeking both growth and income, as the company announced a dividend hike on Jan 29, 2014. Moreover, it raised its quarterly dividend by 7.1% to 30 cents per share (or $1.20 annually) from 28 cents (or $1.12 annually). The new payout will be given on Mar 12, 2014 to stockholders of record on Feb 26.

Also, McGraw-Hill, which competes with Dun & Bradstreet Corp. (DNB - Analyst Report), now seems to be well positioned to focus on high margin business after it offloaded the Education segment and Aviation week. The company is now concentrating on more on core financial areas that would help it emerge as a leader in rating provider, benchmark provider, and analytics in the global capital and commodity markets.

Further, McGraw-Hill is likely to benefit from its strategic investments such as formation of S&P Dow Jones Indices coupled with the S&P Capital IQ’s acquisitions of Credit Market Analysis, QuantHouse, R2 Financial Technologies and TheMarkets.com along with a significant stake (68%) in India’s leading rating agency CRISIL as it positions to grab a wider market share.

Mc Graw Hill currently has a Zacks Rank #2 (Buy).

Key Picks from the Sector

Other stocks worth considering in the financial services sector include FactSet Research Systems Inc. (FDS - Analyst Report) and Verisk Analytics, Inc. (VRSK - Snapshot Report). Both carry a Zacks Rank #2.

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