The software maker posted earnings of 39 cents a share for the fiscal fourth quarter, beating analysts' estimates of 37 cents a share by 2 cents. Revenue rose 15% from the year-ago quarter to $400 million. Analysts surveyed by Thomson Reuters expected revenue of $399.92 million for the quarter.
"The fourth quarter was a strong finish to fiscal 2014, and it was highlighted by a record number of deals over $1 million and 24% growth in our billings proxy to $565 million," Jim Whitehurst, president and CEO of Red Hat, said in a statement." Continued strong demand for Red Hats technology portfolio drove strong growth in our core platform and application development technologies during the fourth quarter. In addition, our cross-selling efforts resulted in early wins for our emerging technologies, which address top CIO priorities that are driving the evolution of enterprise computing."
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TheStreet Ratings team rates RED HAT INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate RED HAT INC (RHT) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RHT's revenue growth has slightly outpaced the industry average of 10.9%. Since the same quarter one year prior, revenues rose by 15.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the 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 1.24, which illustrates the ability to avoid short-term cash problems.
- RED HAT INC reported significant earnings per share improvement 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, RED HAT INC increased its bottom line by earning $0.77 versus $0.74 in the prior year. This year, the market expects an improvement in earnings ($1.47 versus $0.77).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Software industry. The net income increased by 49.6% when compared to the same quarter one year prior, rising from $34.77 million to $52.03 million.
- The gross profit margin for RED HAT INC is currently very high, coming in at 88.35%. 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 13.11% significantly trails the industry average.
- You can view the full analysis from the report here: RHT Ratings Report