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GuruFocus has detected 3 Warning Signs with Red Hat Inc $RHT.
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Red Hat Inc (NYSE:RHT)
EV-to-EBIT
46.78 (As of Today)

EV/EBIT ratio is calculated as enterprise value divided by its Earnings Before Interest and Taxes (EBIT). As of today, Red Hat Inc's enterprise value is $16,691 Mil. Red Hat Inc's earnings before interest and taxes (EBIT) for the trailing twelve months (TTM) ended in May. 2017 was $357 Mil. Therefore, Red Hat Inc's EV/EBIT ratio for today is 46.78.

RHT' s EV-to-EBIT Range Over the Past 10 Years
Min: 9.7   Max: 64.5
Current: 46.78

9.7
64.5

During the past 13 years, the highest EV/EBIT Ratio of Red Hat Inc was 64.50. The lowest was 9.70. And the median was 43.60.

RHT's EV-to-EBIT is ranked lower than
77% of the 1287 Companies
in the Global Software - Application industry.

( Industry Median: 18.74 vs. RHT: 46.78 )

Joel Greenblatt calls the inversion of this ratio Earnings Yield (Joel Greenblatt). Red Hat Inc's enterprise value for the quarter that ended in May. 2017 was $15,036 Mil. Red Hat Inc's earnings before interest and taxes (EBIT) for the trailing twelve months (TTM) ended in May. 2017 was $357 Mil. Red Hat Inc's Earnings Yield (Joel Greenblatt) for the quarter that ended in May. 2017 was 2.37%.


Definition

Red Hat Inc's EV/EBIT for today is calculated as:

EV/EBIT=Enterprise Value (Today)/Earnings Before Interest and Taxes (EBIT) (TTM)
=16691.260/356.777
=46.78

Red Hat Inc's current Enterprise Value is $16,691 Mil.
Red Hat Inc's Earnings Before Interest and Taxes (EBIT) for the trailing twelve months (TTM) ended in May. 2017 was 85.36 (Aug. 2016 ) + 82.727 (Nov. 2016 ) + 97.675 (Feb. 2017 ) + 91.015 (May. 2017 ) = $357 Mil.

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


Explanation

This is a more accurate valuation of companies' operation because it consider the debt and cash on its balance sheet, and non-operating items such as interest payment, tax, and one-time items are not included in the Operating Income.

Joel Greenblatt calls the inversion of this ratio Earnings Yield (Joel Greenblatt).

Red Hat Inc's Earnings Yield (Joel Greenblatt) for the quarter that ended in May. 2017 is calculated as:

Earnings Yield (Joel Greenblatt) (Q: May. 2017 )=EBIT (TTM)/Enterprise Value (Q: May. 2017 )
=356.777/15036.4446
=2.37 %

Red Hat Inc's Enterprise Value for the quarter that ended in May. 2017 was $15,036 Mil.
Red Hat Inc's Earnings Before Interest and Taxes (EBIT) for the trailing twelve months (TTM) ended in May. 2017 was 85.36 (Aug. 2016 ) + 82.727 (Nov. 2016 ) + 97.675 (Feb. 2017 ) + 91.015 (May. 2017 ) = $357 Mil.

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


Related Terms

Enterprise Value, Earnings Yield (Joel Greenblatt), Earnings Before Interest and Taxes (EBIT)


Historical Data

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

Red Hat Inc Annual Data

Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16Feb17
ev2ebit 22.8115.2344.7948.8043.7542.5143.2945.7838.1140.51

Red Hat Inc Quarterly Data

Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17May17
ev2ebit 45.7848.1042.9148.5238.1144.1240.3342.3240.5142.15
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