Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Red Hat, Inc. (RHT)’s Slump Gives Long-Term Investors a Buying Opportunity

Page 1 of 2

Tomorrow, Red Hat, Inc. (NYSE:RHT) will release its latest quarterly results. The company best known for its open-source Linux-based software products has continued to see its sales grow, but that hasn’t kept its stock from sliding to its lowest level since the beginning of 2012.

Red Hat Inc (NYSE:RHT)

Red Hat, Inc. (NYSE:RHT) hasn’t found any shortage of opportunities, with products designed to serve a wide variety of different businesses ranging from health care and finance to retail and travel. But at its current valuation, the stock needs the business to produce substantial growth to justify the share price. Let’s take an early look at what’s been happening with Red Hat over the past quarter and what we’re likely to see in its quarterly report.

Stats on Red Hat

Analyst EPS Estimate $0.31
Change From Year-Ago EPS 3.3%
Revenue Estimate $359.84 million
Change From Year-Ago Revenue 14.3%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

Will Red Hat’s earnings pull the stock back up?
From the perspective of analysts, Red Hat, Inc. (NYSE:RHT)’s earnings prospects have gotten a bit dimmer in recent months. Estimates for the May quarter have fallen by a penny per share, with a $0.04 decline in full fiscal-year earnings consensus calls. The stock has been quite volatile recently, falling about 10% since mid-March.

The bad news for Red Hat began after the company’s previous earnings report in late March. The company failed to post its usual expectations-beating revenue figure, instead falling short of estimates and raising concerns that growth has slowed. Yet with an emphasis toward building long-term relationships with multi-year contracts, Red Hat, Inc. (NYSE:RHT) sacrificed upfront revenue to get a predictable, steady stream of recurring revenue that should last well into the future. Moreover, with its cost advantage over offerings from larger rivals, Red Hat appeals to budget-conscious businesses seeking IT solutions.

Last month, Red Hat, Inc. (NYSE:RHT)’s stock climbed sharply as rumors arose about the potential for a buyout bid for the company. International Business Machines Corp. (NYSE:IBM) opened a center in Beijing to assist in the development of open-source Linux business applications, collaborating with Red Hat to help IBM build out its application offerings for its Power Systems servers. Meanwhile, Oracle Corporation (NASDAQ:ORCL) has struggled recently, blaming its sales team for recent shortfalls in revenue but also facing stiff competition from Red Hat’s JBoss Enterprise Middleware segment. For either company, Red Hat, Inc. (NYSE:RHT) would make an easily digestible acquisition, yet rumors haven’t led to any definitive action from either company, and an analyst downgrade sent shares back downward over the past month.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!