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Trade-Ideas LLC identified

Rackspace Hosting

(

RAX

) as a post-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Rackspace Hosting as such a stock due to the following factors:

  • RAX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $58.4 million.
  • RAX is up 2.1% today from today's close.

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More details on RAX:

Rackspace Hosting, Inc., through its subsidiaries, provides managed cloud services in the business information technology (IT) market worldwide. RAX has a PE ratio of 24. Currently there are 7 analysts that rate Rackspace Hosting a buy, 1 analyst rates it a sell, and 8 rate it a hold.

The average volume for Rackspace Hosting has been 2.6 million shares per day over the past 30 days. Rackspace Hosting has a market cap of $2.9 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.60 and a short float of 14.5% with 5.18 days to cover. Shares are down 12% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rackspace Hosting as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • RAX's revenue growth trails the industry average of 20.7%. Since the same quarter one year prior, revenues rose by 10.7%. 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.
  • RAX's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.78 is very high and demonstrates very strong liquidity.
  • Looking at the price performance of RAX's shares over the past 12 months, there is not much good news to report: the stock is down 59.13%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Internet Software & Services industry average. The net income has decreased by 13.0% when compared to the same quarter one year ago, dropping from $36.92 million to $32.10 million.

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