Rackspace Hosting Inc. (RAX): 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.

Rackspace Hosting ( RAX) 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 0.6%. By the end of trading, Rackspace Hosting fell $1.32 (-2.3%) to $55.97 on average volume. Throughout the day, 2.3 million shares of Rackspace Hosting exchanged hands as compared to its average daily volume of two million shares. The stock ranged in price between $55.50-$57.69 after having opened the day at $57.52 as compared to the previous trading day's close of $57.29. Other companies within the Computer Software & Services industry that declined today were: AVG Technologies ( AVG), down 10.7%, Velti ( VELT), down 7.1%, China Information Technology ( CNIT), down 5.8%, and Cimatron ( CIMT), down 4.5%.
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Rackspace Hosting, Inc. provides cloud computing services, managing Web-based IT systems for small and medium-sized businesses, and large enterprises worldwide. Rackspace Hosting has a market cap of $7.88 billion and is part of the technology sector. The company has a P/E ratio of 76.1, above the S&P 500 P/E ratio of 17.7. Shares are down 22.9% year to date as of the close of trading on Thursday. Currently there are 10 analysts that rate Rackspace Hosting a buy, no analysts rate it a sell, and seven rate it a hold.

TheStreet Ratings rates Rackspace Hosting as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

On the positive front, Authentidate Holding Corporation ( ADAT), up 17.6%, ARC Document Solutions ( ARC), up 9.3%, NCI ( NCIT), up 5.9%, and BroadSoft ( BSFT), up 5.7%, were all gainers within the computer software & services industry with Accenture ( ACN) 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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