Red Hat Inc. (RHT): Today's Featured Computer Software & Services Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

Red Hat ( RHT) pushed the Computer Software & Services industry lower today making it today's featured Computer Software & Services laggard. The industry as a whole closed the day down 1.3%. By the end of trading, Red Hat fell $2.46 (-4.3%) to $55.08 on heavy volume. Throughout the day, five million shares of Red Hat exchanged hands as compared to its average daily volume of 1.9 million shares. The stock ranged in price between $55-$57.06 after having opened the day at $55.08 as compared to the previous trading day's close of $57.54. Other companies within the Computer Software & Services industry that declined today were: e-Future Information Technology ( EFUT), down 9.3%, Astea International ( ATEA), down 6.9%, Wave Systems Corporation ( WAVX), down 6.7%, and Velti ( VELT), down 6.6%.
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Red Hat, Inc. provides open source software solutions to enterprise customers worldwide. The company also offers enterprise-ready open source operating system platforms. Red Hat has a market cap of $11.13 billion and is part of the technology sector. The company has a P/E ratio of 74.9, equal to the average computer software & services industry P/E ratio and above the S&P 500 P/E ratio of 17.7. Shares are up 39.6% year to date as of the close of trading on Monday. Currently there are 18 analysts that rate Red Hat a buy, one analyst rates it a sell, and six rate it a hold.

TheStreet Ratings rates Red Hat as a buy. 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, growth in earnings per share, compelling growth in net income and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the computer software & services industry could consider iShares S&P NA Tech Software Idx ( IGV) while those bearish on the computer software & services industry could consider ProShares Ultra Short Technology ( REW).

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