Rackspace Hosting Inc. Stock Buy Recommendation Reiterated (RAX)
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- RACKSPACE HOSTING INC has improved earnings per share by 16.7% 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 $0.75 versus $0.55 in the prior year. This year, the market expects an improvement in earnings ($1.02 versus $0.75).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 19.4% when compared to the same quarter one year prior, going from $25.05 million to $29.91 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 33.2%. Since the same quarter one year prior, revenues rose by 24.6%. 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 0.15 is very low, it is currently higher than that of the industry average. To add to this, RAX has a quick ratio of 1.51, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for RACKSPACE HOSTING INC is currently very high, coming in at 73.00%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, RAX's net profit margin of 8.47% significantly trails the industry average.
--Written by a member of TheStreet Ratings Staff. It's Official: Action Alerts PLUS beats the S&P 500 with Dividends Reinvested! Cramer and Link were up 16.72% in 2012. Were you? See what they are trading for 14-days FREE
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