Red Hat Inc. Second Quarter Earnings Sneak Peek

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S&P 500 (NYSE:SPY) component Red Hat, Inc. (NYSE:RHT) will unveil its latest earnings on Monday, September 24, 2012. Red Hat is engaged in providing open source software solutions. They are known for their version of Linux, Red Hat Enterprise Linux.

Red Hat, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 21 cents per share, a decline of 4.5% from the company’s actual earnings for the same quarter a year ago. The average estimate is the same as three months ago. Between one and three months ago, the average estimate was unchanged. It also has not changed during the last month. For the year, analysts are projecting net income of 87 cents per share, a rise of 24.3% from last year.

Past Earnings Performance: Last quarter, the company topped estimates by 0 cents, coming in at profit of 20 cents per share against a mean estimate of net income of 19 cents. The company fell in line with estimates in the fourth quarter of the last fiscal year.

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A Look Back: In the first quarter, profit rose 15.4% to $37.5 million (19 cents a share) from $32.5 million (17 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 18.9% to $314.7 million from $264.7 million.

Wall St. Revenue Expectations: Analysts predict a rise of 14.5% in revenue from the year-earlier quarter to $322.1 million.

Stock Price Performance: Between July 23, 2012 and September 18, 2012, the stock price had risen $4.57 (8.7%), from $52.64 to $57.21. It saw one of its worst periods between November 15, 2011 and November 25, 2011 when shares fell for eight straight days, dropping 14.8% (-$7.79) over that span. The stock price saw one of its best stretches over the last year between October 4, 2011 and October 14, 2011, when shares rose for nine straight days, increasing 18.9% (+$7.55) over that span.

Key Stats:

With double-digit revenue growth the past four quarters, this earnings release is a chance to keep that positive trend going. The company has averaged year-over-year revenue growth of 22.8% over the last four quarters.

This upcoming earnings announcement will be a chance to build on positive earnings momentum over the last three quarters. Net income rose 47% in the third quarter of the last fiscal year and 7.3% in the fourth quarter of the last fiscal year before increasing again in the first quarter.

Analyst Ratings: With 17 analysts rating the stock a buy, one rating it a sell and six rating the stock a hold, there are indications of a bullish stance by analysts.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.45 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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