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 up 1%. By the end of trading, Red Hat fell 85 cents (-1.7%) to $49.39 on heavy volume. Throughout the day, 4.6 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 $49.10-$50.62 after having opened the day at $50.55 as compared to the previous trading day's close of $50.24. Other companies within the Computer Software & Services industry that declined today were: Cimatron ( CIMT), down 8.2%, ARC Document Solutions ( ARC), down 6.9%, icad ( ICAD), down 5.3%, and Callidus Software ( CALD), down 5.1%.
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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 $9.9 billion and is part of the technology sector. The company has a P/E ratio of 69.2, above the S&P 500 P/E ratio of 17.7. Shares are down 3.2% 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 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 increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

On the positive front, China Mobile Games and Entertainment Group ( CMGE), up 65.3%, DynaVox ( DVOX), up 37.7%, Wireless Ronin Technologies ( RNIN), up 29%, and Authentidate Holding Corporation ( ADAT), up 12.8%, were all gainers within the computer software & services industry with VMWare ( VMW) being today's featured computer software & services industry leader.

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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