The 10-second takeaway
For the quarter ended Aug. 31 (Q2), Red Hat met expectations on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue expanded and GAAP earnings per share dropped.
Gross margins expanded, operating margins dropped, net margins dropped.
Red Hat notched revenue of $322.6 million. The 27 analysts polled by S&P Capital IQ foresaw net sales of $322.3 million on the same basis. GAAP reported sales were 15% higher than the prior-year quarter's $281.3 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.28. The 29 earnings estimates compiled by S&P Capital IQ anticipated $0.29 per share. GAAP EPS of $0.18 for Q2 were 10% lower than the prior-year quarter's $0.20 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 85.2%, 180 basis points better than the prior-year quarter. Operating margin was 15.5%, 320 basis points worse than the prior-year quarter. Net margin was 10.9%, 330 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $340.1 million. On the bottom line, the average EPS estimate is $0.30.
Next year's average estimate for revenue is $1.33 billion. The average EPS estimate is $1.19.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 612 members out of 750 rating the stock outperform, and 138 members rating it underperform. Among 191 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 161 give Red Hat a green thumbs-up, and 30 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 $59.63.
Software and computerized services are being consumed in radically different ways, on new and increasingly mobile devices. Many old leaders will be left behind. Whether or not Red Hat makes the coming cut, you should check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-dollar Revolution." Click here for instant access to this free report.
- Add Red Hat to My Watchlist.
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. The Motley Fool has no positions in the stocks mentioned above. 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.