Red Hat Inc. (RHT): Today's Featured Technology 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 Technology sector lower today making it today's featured Technology laggard. The sector as a whole closed the day up 0.4%. By the end of trading, Red Hat fell $1.35 (-2.5%) to $52.80 on average volume. Throughout the day, 2.4 million shares of Red Hat exchanged hands as compared to its average daily volume of 1.7 million shares. The stock ranged in price between $52.53-$54.05 after having opened the day at $54.05 as compared to the previous trading day's close of $54.15. Other companies within the Technology sector that declined today were: Oi ( OIBR), down 12.7%, DynaVox ( DVOX), down 11.9%, Aehr Test Systems ( AEHR), down 10.3%, and II-VI ( IIVI), down 9.5%.
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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 $10.46 billion and is part of the computer software & services industry. The company has a P/E ratio of 74.1, above the S&P 500 P/E ratio of 17.7. Shares are up 2.2% year to date as of the close of trading on Friday. Currently there are 17 analysts that rate Red Hat a buy, one analyst rates it a sell, and eight 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, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

On the positive front, Geospace Technologies ( GEOS), up 49.7%, Daqo New Energy ( DQ), up 25%, GSE Systems ( GVP), up 21.5%, and Advanced Photonix ( API), up 19.4%, were all gainers within the technology sector with First Solar ( FSLR) being today's featured technology sector leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the technology sector could consider Technology Select Sector SPDR ( XLK) while those bearish on the technology sector could consider ProShares Ultra Short Technology ( REW).

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