Rackspace Hosting (RAX) Is Today's Pre-Market Mover With Heavy Volume Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Rackspace Hosting ( RAX) as a pre-market mover with heavy volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Rackspace Hosting as such a stock due to the following factors:

  • RAX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $61.4 million.
  • RAX traded 137,891 shares today in the pre-market hours as of 8:13 AM, representing 10.1% of its average daily volume.

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More details on RAX:

Rackspace Hosting, Inc., through its subsidiaries, provides cloud computing services and managing Web-based IT systems for small and medium-sized businesses and large enterprises worldwide. RAX has a PE ratio of 69.6. Currently there are 9 analysts that rate Rackspace Hosting a buy, 1 analyst rates it a sell, and 5 rate it a hold.

The average volume for Rackspace Hosting has been 1.2 million shares per day over the past 30 days. Rackspace Hosting has a market cap of $7.6 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.45 and a short float of 5.6% with 4.02 days to cover. Shares are up 15.4% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Rackspace Hosting 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, impressive record of earnings per share growth, compelling growth in net income and solid stock price performance. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • RAX's revenue growth has slightly outpaced the industry average of 5.9%. Since the same quarter one year prior, revenues rose by 15.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although RAX's debt-to-equity ratio of 0.15 is very low, it is currently higher than that of the industry average. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.34, which illustrates the ability to avoid short-term cash problems.
  • RACKSPACE HOSTING INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, RACKSPACE HOSTING INC increased its bottom line by earning $0.78 versus $0.60 in the prior year. This year, the market expects an improvement in earnings ($0.93 versus $0.78).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet Software & Services industry. The net income increased by 77.5% when compared to the same quarter one year prior, rising from $20.80 million to $36.92 million.
  • Powered by its strong earnings growth of 85.71% and other important driving factors, this stock has surged by 99.18% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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