Red Hat First Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component Red Hat, Inc. (NYSE:RHT) will unveil its latest earnings on Wednesday, June 20, 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 analyst estimate is for net income of 19 cents per share, a rise of 5.6% from the company’s actual earnings for the year-ago quarter. 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. For the year, analysts are projecting profit of 88 cents per share, a rise of 25.7% from last year.

Past Earnings Performance: The company met estimates last quarter after beating the forecasts in the prior two. In the fourth quarter of the last fiscal year, the company reported net income of 20 cents per share versus a mean estimate of profit of 20 cents per share. In the third quarter of the last fiscal year, the company beat estimates by 2 cents.

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Wall St. Revenue Expectations: On average, analysts predict $310.9 million in revenue this quarter, a rise of 17.4% from the year-ago quarter. Analysts are forecasting total revenue of $1.35 billion for the year, a rise of 19.5% from last year’s revenue of $1.13 billion.

Stock Price Performance: Between April 18, 2012 and June 14, 2012, the stock price had fallen $6.06 (-10.1%), from $60.21 to $54.15. 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.

A Look Back: In the fourth quarter of the last fiscal year, profit rose 7.3% to $36 million (19 cents a share) from $33.5 million (17 cents a share) the year earlier, meeting analyst expectations. Revenue rose 21.3% to $297 million from $244.8 million.

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 24.8% 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 69% in the second quarter of the last fiscal year and 47% in the third quarter of the last fiscal year before increasing again in the fourth quarter of the last fiscal year.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.48 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. The company regressed in this liquidity measure from 1.57 in the third quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 12.6% to $826.3 million while assets rose 5.9% to $1.22 billion.

Analyst Ratings: With 16 analysts rating the stock a buy, one rating it a sell and four rating the stock a hold, there are indications of a bullish stance by analysts. Over the last three months, the stock’s average rating has increased from hold to moderate buy.

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

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