Rackspace Solve summits bring prospects together with existing customers. Image credit: Rackspace Hosting.

Shares of Rackspace Hosting (NYSE: RAX) stock entered Tuesday up nearly 7% year to date. Will the rally continue, or is a sell-off lurking in the shadows? A lot depends on how well the business performs. Here's a closer look at what analysts expect to see when the web hosting provider reports fourth-quarter earnings Tuesday afternoon:

Q4 EstimatesRevenueYOY GrowthEPSYOY Growth
Low Estimate $464.9 million 13.9% $0.12 (14.3%)
High Estimate $476 million 41.8% $0.23 64.3%
S&P CAPITAL IQ CONSENSUS $473.52 million 16% $0.19 35.7%

Source: S&P Capital IQ.

A miss would be surprising and could lead to a sharp sell-off. Why? Rackspace has either met or exceeded Wall Street's projections in each of the last four quarters:

Earnings HistoryQ4 2013Q1 2014Q2 2014Q3 2014
Consensus $0.14 $0.12 $0.16 $0.15
Actual $0.14 $0.18 $0.16 $0.18
DIFFERENCE $0.00 $0.06 $0.00 $0.03

Source: S&P Capital IQ.

Looking at the overall business, I'm watching for momentum in each of these three areas:

1. Improving margins. Gross margin surged in the third quarter -- both sequentially and year over year -- as Rackspace focused on selling more high-value services. As investors, we want to see sustained margin growth because it indicates that Rackspace can maintain pricing power and stay above the bandwidth wars being waged by the likes of Amazon.com (NASDAQ:AMZN) and Google (NASDAQ:GOOGL)(NASDAQ:GOOG).

2. Bigger deals. CEO Taylor Rhodes has long insisted that when Rackspace gets a chance to sell the virtues of hands-on "Fanatical Support" customers buy.The company's relatively new "Solve" summits are designed to create more of these encounters, leading to what the company claims is a pipeline of big deals. Q3 saw a record of sales worth more than $100,000 a month in revenue. At the time, Rhodes said there was an "even larger number of these type of deals that we've got in the pipeline for Q4." Investors should be expecting him to make good on that estimate.

3. Leverage leading to higher cash flow. In Q3, cash flow from operations fell year over year. Look for that to change in Q4 as Rackspace gains leverage from higher margins and rising revenue per server. (The latter has risen sequentially in each of the last five quarters -- from $1,290 per month in the third quarter of 2013 to $1,405 per month last quarter.) 

Rackspace reports Q4 results Tuesday after the market closes; check back here for our take on the report. And in the meantime, leave a comment to let us know what you're expecting, and what you think of Rackspace stock at current prices.