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Top 6 Earnings Releases to Watch Next Week

NEW YORK ( TheStreet) -- The Federal Reserve refilled the punchbowl and as long as you haven't made any mistakes in your financial planning (trying to build a savings or avoiding debt), the party is still going strong.

Next week we find out how a major housing market company is faring in a world awash in easy cheap money. We'll also see earnings for several technology companies, including the maker of BlackBerry.

RHT Chart RHT data by YCharts

Red Hat (RHT - Get Report)

Background: Red Hat is a leading developer and provider of open source software and services, including the Red Hat Linux operating system. Red Hat trades an average of two million shares per day with a market cap of $11 billion.

52-Week Range: $37.85 - $62.75

Book Value: $7.34

Price To Book: 7.99

Red Hat is forecast to report slightly lower second-quarter earnings after the market closes on Monday. The consensus estimate is currently 21 cents a share compared with 22 cents during the equivalent quarter last year. Technically, the difference is 4.5%, but I don't consider percentage changes meaningful when the gross amount is 1 cent.

Seventeen out of 24 analysts rate Red Hat a buy or strong buy. The company has six holds, and one sell rating.

Twelve out of 24 analysts now rate Red Hat a strong buy, up from 11 analysts a month ago. The number of analysts rating Red Hat a strong buy during the last three months has moved up and down. The average analyst target price for Red Hat is $60.53.

It's never a bad idea to be within good company, and Jim Cramer believes Red Hat is cheap as of a week ago. I concur and wrote about it in this article. .

After the company missed guidance in the last earnings report, I wrote that I believed the guidance wasn't that bad. As it turns out, I was not only correct but Red Hat shares only took about a month before they were trading above the earnings announcement.

After a brief dip below the 200-day moving average, the trend is once again bullish. Based on technical analysis, Red Hat is in an upward trend, and there is no indication the trend is about to end.

Not all of the news is swell for investors, however.

Red Hat has blistering earnings multiple ratios that leave the open source company like an elephant riding a bike. It better not slow down too much or there will be hell to pay. The trailing 12-month price-to-earnings ratio is 70. Looking ahead, the ratio does not demonstrate a great deal of improvement. The mean fiscal year estimate price-to-earnings ratio is 67, if Red Hat comes in on target with estimated earnings of 87 cents per share this year.

I am consistently reluctant in advocating the bullish case for stocks above a multiple of 20. Red Hat does pull a rabbit out of the fedora and receives my aberrant bullish opinion in front of earnings. I have faith Red Hat beats this quarter.

Weinstein estimate: Red Hat beats and stock reacts positively. Currently, the short interest based on the float is small and not a big concern. Short interest is 3.1%.
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WAG $81.65 2.05%
DFS $54.83 0.00%
LEN $44.01 0.00%
MU $10.06 0.00%
RHT $71.57 0.00%


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