RedHat (RHT) Surges After Top-, Bottom-Line Earnings Beat

By Jeffrey Moraes and John Darsie, T3Live Jun 20, 2013, 10:14 AM 

Red Hat Inc. (NYSE:RHT): The open – software company beat both bottom-line EPS and top-line revenue estimates after the closing bell Wednesday, while guidance continues to be neutral with not much change on next quarter’s and this year’s EPS expectations. RHT is almost 3% higher this morning after the report despite the weak performance of broad market futures overnight.

EPS Results

Actual $0.32 vs. Expected $0.31
Grew 6.67% year-over-year
Revenue Results
Actual $363.25M vs. Expected $359.77M
Grew 15.42% year-over-year
Revenue increased 4.08% from $10.95 billion in the previous quarter


EPS Q1 2014: Actual $0.33 vs. Expected $0.33 (Unchanged)
Earnings per share in the current fiscal year: Actual $1.34 vs. $1.38

Key Takeaways from Conference Call

CEO Jim Whitehurst: “The first quarter was a solid start to Fiscal 2014, with both revenue and profitability coming in above the high-end of our guidance. We delivered mid-teens revenue growth driven by customer demand for innovative open source technologies based on a high-value subscription model.”

Taking a Look at the Chart

Pattern: Long-term uptrend, short-term downtrend

Redhat’s earnings have been cheered by investors as the stock is up almost 3% in the pre-market despite the sharp sell-off in S&P futures. RHT has been in a steady downtrend since hitting a high at on May 17. Prior to that, Red Hat had been on a steady uptrend that topped out at a resistance level of $55. After hitting a 52-week low on June 6 of $44.92 a share, the stock is fund its footing again, and today’s move will obviously help. RHT still has some work to do to get back to around the $52 level to break the multi-month downtrend, and could start to form a more clear-cut wedge pattern over the next few weeks/months.

Potential Sympathy Trades – Stocks in the Same Sector

BMC Software, Inc. (NASDAQ:BMC)
Microsoft Corporation (NASDAQ:MSFT)
Vmware, Inc. (NYSE:VMW)

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