It is time to announce earnings for the final quarter and fiscal 2018 at the global open-source software provider, Red Hat Inc. (RHT, Financial).
The due date is Monday, March 26, after the close of the New York Stock Exchange.
The consensus is for a 32.8% growth in earnings to 81 cents per share. This is a mean of 29 estimates ranging from 76 to 82 cents.
Source: Yahoo Finance
Revenues are predicted to reach $761.6 million. That is a 21.1% growth from the prior-year quarter.
On Monday, the U.S. open-source software provider also will report figures for the entire year and predictions are for a net profit of $2.87 per share on a revenue of $2.91 billion. If analysts are right, this will translate to a 26.4% and 20.6% growth in earnings and revenue for 2018.
The trend in Red Hat’s total revenues over the last four quarters and full fiscals is a positive one. It is expected to continue in 2018, as well.
In terms of profitability of its operations and ability to grow earnings, GuruFocus gives Red Hat a rating of 9 out of 10. When we project Red Hat into the future, earnings are predicted to grow at a 16.4% rate from 2018 to 2019 and at an annual average 18.1% rate over the next five years.
As of the most recent quarter, the software company has about $1.7 billion in cash on hand and short-term investments. Total current assets and liabilities are valued $2.5 and $1.8 billion for a current ratio of 1.4 versus an industry average of 1.96.
Total fixed assets and long-term liabilities are valued $2.3 and $1.5 billion. The total equity is worth $1.43 billion. Long-term debt of $762.4 million leads to a long-term debt-to-equity ratio of 53.3% versus an industry median of 27%. That is an indication that the business of Red Hat is more leveraged than the industry in which the software company operates. However, an interest coverage ratio of 17.86 tells the company is able to pay interest expenses on its outstanding financial burden.
In general, GuruFocus assigns Reda Hat a financial strength of 7 out of 10.
And many more ratios can be found on GuruFocus, which also provides investors with the opportunity to go through the company’s financials as far back as 30 years ago.
Red Hat is currently trading at $154.7 per share with a market capitalization of $27.384 billion. The stock gained 87.5% for the 52-weeks through March 21 and outperformed the S&P 500 index by 73.3%. The 52-weeks is 81.92 to $157.22 per share.
Source: Yahoo Finance
The stock is also characterized by the following ratios: a price-book ratio of 10.09 versus an industry median of 3.25 times and a price-sales ratio of 10.20 versus an industry median of 2.57 times.
The share price of Red Hat is above both the Peter Lynch Earnings Line (P/E = 15) and the Price at Med P/E without NRI (P/E = 66.4), according to the chart powered by GuruFocus.
The recommendation rating is 2.2 out of 5. The average target price is at $137.77. That is a mean of 30 estimates ranging from $100 to $165 per share.
Red Hat is reporting 177 million shares outstanding, of which 84.44% is held by institutions and 0.87% by insiders.
Among the top institutional holders of Red Hat, Price T. Rowe Associates Inc and the Vanguard Group, Inc. are prominent with 12.1% and 10.46% of total shares outstanding of the company. Figures on holdings are as of Dec. 30, 2017.
(Disclosure: I have no positions in any security mentioned in this article.)
