Red Hat ($RHT) Stock | “Red Hot” After Earnings Report


Red Hat, Inc. (NYSE: RHT)


On Thursday, December 17, 2015, Red  Hat Inc. reported stellar earnings that sent the shares soaring in aftermarket trading. The company which specializes in software solutions to worldwide customers involved in cloud storage, cloud technologies, and computer management reported blow out earnings following a common pattern when they report. Shares were up by 6.5 % to $83.93 in aftermarket trading. During the regular session shares closed at $78.86, basically flat for the day in the session.


The Numbers

Red Hat reported earning a whopping $0.48 per share on roughly $550 million in revenue. Analysts had estimated the entity to earn $0.47 per share on revenue of $524 million. This marks nearly three years of quarter-over-quarter double digit increases in their earnings growth.


Executive Comments

On the post earnings announcement conference call, CFO Frank Calderoni (the former Cisco Systems executive who joined Red Hat in July), offered these comments:

“We delivered another strong quarter as we exceeded our guidance,”  We have now had four consecutive quarters of total revenue growth of 20% or higher on a year-over-year constant currency basis. While we continued to invest in our business,  strong revenue growth has driven non-GAAP operating income growth of 18% and operating cash flow growth of 16% year-to-date for fiscal 2016.  

And CEO Jim Whitehurst added;

“Our investments in technologies and partnerships continued to generate strong results, as customers transform their IT infrastructure through the increasing adoption of open-source technologies and cloud computing,” Red Hat CEO Jim Whitehurst said in the firm’s earnings release. “During the third quarter, we strengthened our leadership position in the open hybrid cloud by introducing new technologies and launching a strategic partnership with Microsoft(NASDAQ: MSFT) and its Azure Cloud.” IBD


RHT Technical Analysis


Following their stellar earnings report, shares of Red Hat opened Friday’s trading session at levels not seen since nearly the year 2000. It was at this time the US markets were considered in bubble territory. Please see the accompanying chart of the monthly price action from the year 2000 showing the precipitous price slide down from nearly $140 per share to around $9.00 per share at its lowest. With Red Hat performing on all cylinders, investors can expect to see continued upward trending in the company’s share price. There may be dips along the way, but savvy investors will likely be waiting for these opportunities to add more shares.


About Red Hat, Inc.

Red Hat, Inc. provides open source software solutions to enterprise customers worldwide. It develops and offers operating system, virtualization, middleware, storage, and cloud technologies. The company’s products include Red Hat Enterprise Linux, an operating system platform that runs on hardware for use in physical, virtual, container, and cloud environments; Red Hat Enterprise Virtualization, which includes standalone virtualization functionality and management tools for server and desktop deployments; and Red Hat JBoss Middleware that offers middleware for developing, deploying, and managing applications, as well as integrating applications, data and devices, and automating business processes. It also offers Red Hat Storage Technologies that enable users to treat storage as a virtualized resource across block, object, and file system storage; and Red Hat cloud offerings that assist users in creating cloud computing environments, such as Red Hat CloudForms, Red Hat Enterprise Linux OpenStack Platform, Red Hat Cloud Infrastructure, and OpenShift by Red Hat. In addition, the company provides other technologies, such as real time operating system, distributed computing, directory services, and user authentication; and consulting, support, and training services. It sells its enterprise technologies through annual or multi-year subscriptions, as well as on-demand through cloud service providers. It has strategic relationships with semiconductor and technology companies, such as Advanced Micro Devices, Inc.; ARM Holdings plc; Intel Corporation; and International Business Machines Corporation (IBM). Red Hat, Inc. also has strategic relationships with cloud service providers, such as, Inc.; Fujitsu Limited; Google Inc.; IBM; Rackspace Hosting, Inc.; and SAVVIS, Inc. The company was formerly known as Red Hat Software, Inc. and changed its name to Red Hat, Inc. in June 1999. Red Hat, Inc. was founded in 1993 and is headquartered in Raleigh, North Carolina. YahooFinance