Rackspace Hosting Third Quarter Earnings Sneak Peek

Rackspace Hosting, Inc. (NYSE:RAX) will unveil its latest earnings on Tuesday, November 6, 2012. Rackspace Hosting is a provider of hosting and cloud computing services.

Rackspace Hosting, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 19 cents per share, a rise of 35.7% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 20 cents. Between one and three months ago, the average estimate moved down. It has been unchanged at 19 cents during the last month. Analysts are projecting profit to rise by 38.2% compared to last year’s 76 cents.

Past Earnings Performance: The company met estimates last quarter after beating the forecasts in the prior two. In the second quarter, the company reported net income of 18 cents per share versus a mean estimate of profit of 18 cents per share. In the first quarter, the company beat estimates by 0 cents.

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A Look Back: In the second quarter, profit rose 43.1% to $25.1 million (18 cents a share) from $17.6 million (13 cents a share) the year earlier, meeting analyst expectations. Revenue rose 29% to $319 million from $247.2 million.

Stock Price Performance: Between August 7, 2012 and October 31, 2012, the stock price rose $14.39 (29.2%), from $49.30 to $63.69. The stock price saw one of its best stretches over the last year between August 21, 2012 and August 29, 2012, when shares rose for seven straight days, increasing 7.4% (+$4.13) over that span. It saw one of its worst periods between May 29, 2012 and June 7, 2012 when shares fell for eight straight days, dropping 13.6% (-$7.06) over that span.

Wall St. Revenue Expectations: On average, analysts predict $335.9 million in revenue this quarter, a rise of 26.9% from the year-ago quarter. Analysts are forecasting total revenue of $1.31 billion for the year, a rise of 27.2% from last year’s revenue of $1.03 billion.

Key Stats:

The company enters this earnings announcement with substantial revenue momentum. The company has averaged year-over-year revenue growth of 31.1% 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 85% in the fourth quarter of the last fiscal year and 67.7% in the first quarter before increasing again in the second quarter.

Analyst Ratings: With nine analysts rating the stock a buy, none rating it a sell and eight rating the stock a hold, there are indications of a bullish stance by analysts. Over the past 90 days, the average rating for the stock has moved up from hold to moderate buy.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.4 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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