Red Hat Inc. Stock Buy Recommendation Reiterated (RHT)
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- The revenue growth came in higher than the industry average of 3.0%. Since the same quarter one year prior, revenues rose by 14.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- RHT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. 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 $103.85 million or 34.69% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.31%.
- The gross profit margin for RED HAT INC is currently very high, coming in at 89.70%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, RHT's net profit margin of 10.85% significantly trails the industry average.
- RED HAT INC's earnings per share declined by 10.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, RED HAT INC increased its bottom line by earning $0.74 versus $0.54 in the prior year. This year, the market expects an improvement in earnings ($1.17 versus $0.74).
--Written by a member of TheStreet Ratings Staff. HOLIDAY SPECIAL: Let Jim Cramer show you every trade he is making in his $2.5 Million portfolio. Join now for 14-days FREE. Sign up today to get e-mail alerts before every trade
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