Red Hat Inc.
) is set to report its fourth quarter 2013 results on Mar 27. In
the previous quarter, the company's earnings matched the Zacks
Consensus Estimate. Let's see how things are shaping up for the
company in this quarter.
Growth Factors this Past Quarter
Red Hat reported encouraging top-line growth in the third
quarter of 2013 but higher-than-expected operating expenses led
to a contraction in the bottom line. The robust top-line growth
was due to higher subscription and training & services
For the fourth quarter of 2013, Red Hat expects revenues in
the range of $347.0 million to $350.0 million, reflecting a
year-over-year increase of 17% to 18%. Earnings on a non-GAAP
basis are projected to be in the range of 29 cents to 30 cents
per share. Management expects non-GAAP operating margin of around
The Zacks Consensus Estimate for the fourth quarter stands at
21 cents per share while that for fiscal 2013 is 82 cents per
There have been no revisions to the fourth quarter and 2013
estimates over the last 60 days. As a result, the Zacks Consensus
Estimate for the two periods has not moved in any direction.
The lack of downward movement in estimates signals that
fourth-quarter results are likely to come in line with
expectations. This is also indicated by the fact that the stock
carries a Zacks Rank #3 (Hold).
We caution against stocks with Zacks Ranks #4 and #5
(Sell-rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revisions
Other Stocks to Consider
Our model states that a stock needs to have both a positive
Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, #2 or #3 to beat the earnings
estimates. You could, however, consider the following stocks that
satisfy both criteria:
) has a Zacks Rank #1 (Strong Buy) and Zacks Earnings ESP of
) has a Zacks Rank #2 (Buy) and Zacks Earnings ESP of +5.56%.
) has a Zacks Rank #3 (Hold) and Zacks Earnings ESP of +2.17.
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