The 10-second takeaway
For the quarter ended Nov. 30 (Q3), Red Hat met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly, and earnings per share improved significantly.
Margins expanded across the board.
Red Hat logged revenue of $290 million. The 22 analysts polled by S&P Capital IQ looked for revenue of $290 million. Sales were 23% higher than the prior-year quarter's $236 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
Non-GAAP EPS came in at $0.28. The 24 earnings estimates compiled by S&P Capital IQ anticipated $0.26 per share on the same basis. GAAP EPS of $0.19 for Q3 were 46% higher than the prior-year quarter's $0.13 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 84.4%, 130 basis points better than the prior-year quarter. Operating margin was 18.5%, 240 basis points better than the prior-year quarter. Net margin was 13.2%, 220 basis points better than the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods.
What does the future hold?
Next quarter's average estimate for revenue is $292 million. On the bottom line, the average EPS estimate is $0.26 (There are 21 revenue estimates and 24 EPS estimates.)
For the full year ending 2012, the average estimate for revenue is $1.1 billion. The average EPS estimate is $1.07. (There are 23 revenue estimates and 25 EPS estimates.)
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 601 members out of 731 rating the stock outperform, and 130 members rating it underperform. Among 188 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 164 give Red Hat a green thumbs-up, and 24 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Red Hat is outperform, with an average price target of $49.09.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.