NEW YORK (TheStreet) -- Red Hat (RHT) stock is gaining by 6.39% to $83.90 in after-hours trading on Thursday, after the company reported financial results that exceeded expectations for the fiscal 2016 third quarter.

The open source software solutions provider reported earnings of 48 cents per share on $552.06 million in revenue for the quarter ended November 30.

Analysts had estimated for earnings of 47 cents per share on revenue of $524.34 million for the latest quarter.

Revenue increased by 21.1% year-over-year driven by subscription revenues, which rose by 22% to $481.37 million on a constant currency basis.

"Our investments in technologies and partnerships continued to generate strong results as customers transform their IT infrastructure through the increasing adoption of open source technologies and cloud computing," CEO Jim Whitehurst said in a statement.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate RED HAT INC as a Buy with a ratings score of B. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, notable return on equity and good cash flow from operations. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

You can view the full analysis from the report here: RHT

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