Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified

Red Hat

(

RHT

) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Red Hat as such a stock due to the following factors:

  • RHT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $132.4 million.
  • RHT has traded 126,499 shares today.
  • RHT is trading at a new lifetime high.

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More details on RHT:

Red Hat, Inc. provides open source software solutions to enterprise customers worldwide. It develops and offers operating system, virtualization, middleware, storage, and cloud technologies. RHT has a PE ratio of 83. Currently there are 20 analysts that rate Red Hat a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Red Hat has been 1.4 million shares per day over the past 30 days. Red Hat has a market cap of $14.4 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.01 and a short float of 3.6% with 3.38 days to cover. Shares are up 13.6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Red Hat as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 5.0%. Since the same quarter one year prior, revenues rose by 15.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • RED HAT INC has improved earnings per share by 8.3% 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 $0.97 versus $0.93 in the prior year. This year, the market expects an improvement in earnings ($1.81 versus $0.97).
  • 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 5.8% when compared to the same quarter one year prior, going from $45.07 million to $47.70 million.
  • Net operating cash flow has increased to $217.38 million or 17.70% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -17.89%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market on the basis of return on equity, RED HAT INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.

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