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NEW YORK (TheStreet) -- Shares of Red Hat Inc (RHT) - Get Red Hat, Inc. Report were down 0.13% to $78.16 in mid-morning trading Thursday, ahead of the IT company's first quarter earnings release, due out after the closing bell later today.

For the first quarter, Red Hat is expected to earn 41 cents per share on revenue of $472.59 million, according to analysts surveyed by Thomson Reuters.

In the same quarter of last year, the company earned 34 cents per share on sales of $423.75 million.

Raleigh, N.C.-based Red Hat is a provider of open source software solutions, using a community-powered approach to develop and offer operating system, virtualization, middleware, storage and cloud technologies.

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The company uses an open source development model that allows it to use the collective input from a global community of contributors to develop, maintain and enhance software. 

Separately, 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 a number of strengths, 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, 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 analysis by TheStreet Ratings Team goes as follows:

  • 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.
  • You can view the full analysis from the report here: RHT Ratings Report