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 0.9%. By the end of trading, Red Hat fell $0.55 (-1.2%) to $45.85 on average volume. Throughout the day, 3,216,894 shares of Red Hat exchanged hands as compared to its average daily volume of 2,577,200 shares. The stock ranged in price between $45.08-$46.34 after having opened the day at $46.23 as compared to the previous trading day's close of $46.40. Other companies within the Computer Software & Services industry that declined today were: Kingtone Wirelessinfo Solution ( KONE), down 15.1%, Marketo ( MKTO), down 13.2%, Velti ( VELT), down 7.7% and Formula Systems (1985 ( FORTY), down 5.3%.
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Red Hat, Inc. provides open source software solutions primarily to enterprise customers worldwide. The company develops and offers operating system, middleware, virtualization, storage, and cloud technologies. Red Hat has a market cap of $8.8 billion and is part of the technology sector. The company has a P/E ratio of 60.1, above the S&P 500 P/E ratio of 17.7. Shares are down 12.4% year to date as of the close of trading on Wednesday. Currently there are 14 analysts that rate Red Hat a buy, 1 analyst rates it a sell, and 9 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, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

On the positive front, Webmedia Brands ( WEBM), down 21.6%, XRS ( XRSC), down 14.7%, Intelligent Systems ( INS), down 9.5% and Mitek Systems ( MITK), down 8.4% , 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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