It is time for the first-quarter earnings announcement for fiscal 2019 for open-source global software provider, Red Hat Inc. (NYSE:RHT). The company is expected to release its financial information after market close on Thursday, June 21.
The consensus is for earnings of 69 cents per share, which is a 23.2% growth on a year over year basis. The estimate is a mean of a total of 32 estimates ranging from 68 to 73 cents. Revenues are predicted to come in at $807.45 million. That is a 19.3% growth from the same quarter of fiscal 2018.
The chart below depicts the trend in Red Hat’s first-quarter revenues over the last five years.
In terms of the profitability of its operations and ability to grow earnings, GuruFocus gives Red Hat a rating of 8 out of 10. That is about the past. Now, let's talk about the future. In profitability and growth, earnings are predicted to grow at a rate of 17.8% from 2018 to 2019 and at an annual average rate of 18.02% over the next five years.
As of the most recent quarter, the software company has about $2.04 billion in cash on hand and securities. Total current assets and liabilities are valued $3.13 billion and $2.31 billion for a current ratio of 1.4 versus an industry average of 2.
Total fixed assets and long-term liabilities are valued $2.34 billion and $1.69 billion. The total equity is worth $1.47 billion. The debt-to-equity ratio is 52% versus an industry median of 27%. That is an indication that the business of Red Hat is more leveraged than the industry. However, the company can pay interest expenses on its outstanding financial burden since the interest coverage ratio is 19.23. The industry has a median interest coverage ratio of 140, according to GuruFocus.
In general, GuruFocus assigns Red Hat a financial strength of 7 out of 10.
On Friday afternoon, Red Hat was trading at $173.99 per share with a market capitalization of $31.25 billion. The stock gained 45% so far this year. The share price is above the 50-SMA line and the 52-weeks is $86.73 to $177.70 per share.
The stock has a price-book ratio of 21.19 times versus an industry median of 3.25 times and a price-sales ratio of 11.14 times 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) of $20.9 and the Price at Med P/E without NRI (P/E = 66.4) of $92.6, according to the chart powered by GuruFocus.
The recommendation rating is 2.2 out of 5. The average target price is $169.58. That is a mean of 31 estimates ranging from $100 to $200 per share.
Red Hat has 177.67 million shares outstanding, of which 87.53% is held by institutions and 0.88% by insiders.
Among the top institutional holders of Red Hat, Price T. Rowe Associates Inc and FMR LLC are prominent with 11.03% and 9.52% of total shares outstanding. Figures on holdings are as of March 31.
(Disclosure: I have no positions in any security mentioned in this article.)
