Rackspace Hosting Inc. Stock Buy Recommendation Reiterated (RAX)
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- RACKSPACE HOSTING INC has improved earnings per share by 38.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, RACKSPACE HOSTING INC increased its bottom line by earning $0.55 versus $0.34 in the prior year. This year, the market expects an improvement in earnings ($0.75 versus $0.55).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 43.1% when compared to the same quarter one year prior, rising from $17.56 million to $25.13 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 36.0%. Since the same quarter one year prior, revenues rose by 29.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Although RAX's debt-to-equity ratio of 0.21 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.28, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $109.18 million or 37.34% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 21.48%.
--Written by a member of TheStreet Ratings Staff. FREE from Real Money's Jim Cramer: Winners and Losers Election 2012 - Steps to take NOW so you can profit no matter who is in charge! Free Download Now
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