High Growth Bodes Well for Red Hat Stock
Red Hat Inc (NYSE:RHT) stock is on a roll, and for a good reason. Red Hat announced strong second-quarter results for fiscal year 2017 that beat consensus estimates and sent a clear signal to the markets that demand for its products is alive and kicking.
Red Hat reported earnings of $0.55 per share. Its revenue of $600.0 million beat estimates by $10.0 million and posted a growth of 19% year-over-year. The company’s total subscription revenue of $531.0 million grew 20% year-over-year. The company also provided strong guidance of $0.58 in earnings per share (EPS) for the next quarter, on revenue of $613.0 million to $623.0 million. (Source: “Red Hat Reports Second Quarter Results for Fiscal Year 2017,” Red Hat Inc, September 21, 2016.)
The vast scope of the cloud and global digitization markets, aided by the Internet of Things (IoT), makes a great case for open-source solution providers, and is likely to keep the RHT stock buoyant. Even though Red Hat stock returns over the last year have been lower than the returns of the broader market, the company is set to benefit from strong growth in its business segments. The majority of analysts covering RHT stock maintain a “strong buy” rating.
Red Hat, the world’s leading provider of open-source solutions to the enterprise community, has been taking steps to continuously collaborate and innovate to bring the best to its customers. Last week, the company extended its collaboration with International Business Machines Corp. (NYSE:IBM) on enhancing the hybrid cloud to bring next-generation cloud platforms to its customers.
Last year, Red Hat had collaborated with Microsoft Corporation (NASDAQ:MSFT) on cloud technology and making its Linux version available to users of “Microsoft Azure,” which is Microsoft’s cloud service.
In June of this year, Red Hat announced that it will acquire 3scale API Management, a leading provider of application programming interface (API) management technology. This adds to the company’s excellent product portfolio of “JBoss Middleware,” “OpenShift,” and “Mobile Application Platform.”
With the continuous efforts that Red Hat is making, investors can look forward to another robust quarter with the company’s focus on digital transformation and hybrid cloud computing. RHT stock is likely to be a gainer, as enterprises adopt application development technologies that Red Hat offers, to help them modernize their infrastructure and application development platforms.