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Red Hat Inc  (NYSE:RHT) Net Income: $266 Mil (TTM As of May. 2017)

Net Income is the net profit that a company earns after deducting all costs and losses including cost of goods, SGA, DDA, interest expenses, non-recurring items and tax. Red Hat Inc's net income for the three months ended in May. 2017 was $73 Mil. Its net income for the trailing twelve months (TTM) ended in May. 2017 was $266 Mil.

Net Income is linked to the most popular Earnings per Share (Diluted) number. Red Hat Inc's Earnings per Share (Diluted) for the three months ended in May. 2017 was $0.40.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Red Hat Inc Annual Data

Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Feb17
Net Income Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 150.20 178.29 180.20 199.37 253.70

Red Hat Inc Quarterly Data

Aug12 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17
Net Income Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 61.18 58.77 67.94 65.80 73.19

Calculation

Net Income is the net profit that a company earns after deducting all costs and losses including cost of goods, SGA, DDA, interest expenses, non-recurring items and tax.

Net Income
= Revenue - Cost of Goods Sold - Selling, General, & Admin. Expense - Research & Development - Depreciation, Depletion and Amortization - Interest Expense - Non-Recurring Items (NRI) - Tax Expense + Others
= - Depreciation, Depletion and Amortization - Interest Expense - Non-Recurring Items (NRI) - Tax Expense + Others
= Operating Income - Interest Expense - Non-Recurring Items (NRI) - Tax Expense + Others
= Pre-Tax Income - Tax Expense + Others

Red Hat Inc's Net Income for the fiscal year that ended in Feb. 2017 is calculated as

Net Income(A: Feb. 2017 )
= Pre-Tax Income + Tax Provision + Other Income (Expense) + Net Income (Discontinued Operations)
=320.18+-66.477+-2.164+0
=252

Red Hat Inc's Net Income for the quarter that ended in May. 2017 is calculated as

Net Income(Q: May. 2017 )
= Pre-Tax Income + Tax Provision + Other Income (Expense) + Net Income (Discontinued Operations)
=84.93+-11.74+-0.586+0
=73

Net Income for the trailing twelve months (TTM) ended in May. 2017 was 58.772 (Aug. 2016 ) + 67.943 (Nov. 2016 ) + 65.803 (Feb. 20 ) + 73.19 (May. 2017 ) = $266 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

Net income is the most widely cited number in reporting a company's profitability. It is linked to the most popular earnings-per-share (EPS) number through:

Red Hat Inc's Earnings per Share (Diluted) (EPS) for the quarter that ended in May. 2017 is calculated as

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Although Net Income and Earnings-per-Share (EPS) are the most widely used parameter in measuring a company's profitability and valuation, it is the least reliable. The reason is that reported earnings can be manipulated easily by adjusting any numbers such as Depreciation, Depletion and Amotorization and non-recurring items.

EPS is most useful for companies that have:

A predictable business
Consistent accounting methods
And few restructurings

The dividend paid to preferred stocks needs to be subtracted from the total net income in the calculation of EPS because common stock holders are not entitled to that part of the net income.


Be Aware

Warren Buffett looks for consistency and upward long term trend. Because of share repurchase it is possible for net earnings trend to differ from EPS trend. He preferred net income over EPS. The companies with durable competitive advantage companies report higher % net earnings to total revenues.

Important: If a company is showing net earnings history greater than 20% on total revenues, it is probably benefiting from a long term competitive advantage.

If net earnings is less than 10%, likely to be in a highly competitive business.


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