Rackspace Hosting Inc. Stock Buy Recommendation Reiterated (RAX)
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- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Internet Software & Services industry average. The net income increased by 17.6% when compared to the same quarter one year prior, going from $23.18 million to $27.26 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 29.8%. Since the same quarter one year prior, revenues rose by 20.2%. 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 0.12 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 1.37, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 62.77% to $113.79 million when compared to the same quarter last year. In addition, RACKSPACE HOSTING INC has also vastly surpassed the industry average cash flow growth rate of -2.38%.
- The gross profit margin for RACKSPACE HOSTING INC is rather high; currently it is at 68.60%. 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 7.52% significantly trails the industry average.
--Written by a member of TheStreet Ratings Staff. Exclusive Offer: Jim Cramer's 'go-to' small/mid-cap guru Bryan Ashenberg only buys stocks he thinks could return 50-100%. See his top picks for 14-days FREE.
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