Rackspace Hosting Inc. Stock Buy Recommendation Reiterated (RAX)
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- RACKSPACE HOSTING INC has improved earnings per share by 35.7% 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 36.1% when compared to the same quarter one year prior, rising from $19.98 million to $27.20 million.
- RAX's revenue growth trails the industry average of 44.4%. Since the same quarter one year prior, revenues rose by 27.0%. 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 0.19 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 1.33, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $100.20 million or 42.50% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.29%.
--Written by a member of TheStreet Ratings Staff. Holiday Special: Subscribe to Action Alerts PLUS to see how Jim Cramer trades his $2.5 Million+ portfolio for 51% off the list price. Your first 14-days are FREE: Sign up today to get e-mail alerts before every trade
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