The 10-second takeaway
For the quarter ended Feb. 29 (Q4), Red Hat beat slightly on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share improved.
Gross margins grew, operating margins expanded, net margins contracted.
Red Hat tallied revenue of $297.0 million. The 21 analysts polled by S&P Capital IQ expected to see net sales of $291.3 million on the same basis. GAAP reported sales were 21% higher than the prior-year quarter's $244.8 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
Non-GAAP EPS came in at $0.29. The 23 earnings estimates compiled by S&P Capital IQ predicted $0.27 per share on the same basis. GAAP EPS of $0.18 for Q4 were 5.9% higher than the prior-year quarter's $0.17 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 85.1%, 210 basis points better than the prior-year quarter. Operating margin was 16.3%, 20 basis points better than the prior-year quarter. Net margin was 12.1%, 160 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $310.9 million. On the bottom line, the average EPS estimate is $0.27.
Next year's average estimate for revenue is $1.35 billion. The average EPS estimate is $1.19.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 606 members out of 733 rating the stock outperform, and 127 members rating it underperform. Among 201 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 175 give Red Hat a green thumbs-up, and 26 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 $49.74.
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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.