Red Hat, Inc. provides open source software solutions to develop and offer operating system, virtualization, management, middleware, cloud, mobile, and storage technologies to various enterprises worldwide. More info.
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value. We use
analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (USD, Millions)||$710.30||$787.73||$920.13||$1,000.10||$1,149.34|
|Source||Analyst x12||Analyst x15||Analyst x16||Analyst x3||Extrapolated @ (14.92%)|
Discounted (@ 9.77%)
Present value of next 5 years cash flows:
Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = $1,149 × (1 + 2.47%) ÷ (9.77% – 2.47%)
Terminal value based on the Perpetuity Method where growth (g) =
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows +
$13,530 = $3,407 + $10,124
Value = Total value / Shares Outstanding ($13,530 / 177)Discount to Share Price
Value per share:
Current discount (share price of $121.6): -59.03%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 9.77% = 2.47% + (0.969 * 7.53%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($21,355,755,516).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.969 = 0.946 (1 + (1- 30%) (3.54%))
Levered Beta used in calculation = 0.969
Mr. James M. Whitehurst, also known as Jim, has been the Chief Executive Officer and President of Red Hat, Inc. since January 1, 2008. Mr. Whitehurst served as the Chief Operating Officer of Delta Air Lines, Inc. from July 20, 2005 to August 2007 and Senior Vice President and Chief Network and Planning Officer from June 1, 2004 to July 2005. From 2002 to 2004, Mr. Whitehurst served as Senior Vice President, Finance, Treasury & Business Development for Delta. He was responsible for Network Planning, Scheduling, Fleet Planning, Strategic & Corporate Planning and Business Development of Delta Air Lines, Inc. Mr. Whitehurst served as Managing Director of Boston Consulting Group and was its Partner. Prior to joining Delta Airlines in 2002, he served as a Vice President and Director of Boston Consulting Group from 1997 to 2001 and held various leadership roles in their Chicago, Hong Kong, Shanghai and Atlanta offices. He has been an Independent Director of United Continental Holdings, Inc. since March 7, 2016 and SecureWorks Corp. since April 21, 2016. He has been a Director of Red Hat, Inc. since January 1, 2008. He serves as a Director at United Airlines, Inc. He serves as a Member of International Advisory Board at Banco Santander, S.A. He served as a Director at DigitalGlobe, Inc. from August 2009 to May 26, 2016. In June 2015, he published a book with Harvard Business Review Press entitled "The Open Organization: Igniting Passion and Performance". He holds a Bachelor's Degree in Computer Science and Economics from Rice University in Houston, Texas. He holds a General Course Degree from the London School of Economics and an MBA from Harvard Business School. He also attended Friedrich-Alexander University in Erlangen.
Average tenure and age of the Red Hat management team in years:
Average tenure and age of the Red Hat board of directors in years:
Red Hat, Inc. provides open source software solutions to develop and offer operating system, virtualization, management, middleware, cloud, mobile, and storage technologies to various enterprises worldwide. It offers infrastructure-related solutions, such as Red Hat Enterprise Linux, an operating system platform that runs on hardware for use in hybrid cloud environments; Red Hat Satellite, a system management offering that helps to deploy, scale, and manage in hybrid cloud environments; and Red Hat Enterprise Virtualization, a software solution that allows customers to utilize and manage a common hardware infrastructure to run multiple operating systems and applications. The company offers application development-related and other technology solutions, such as Red Hat JBoss Middleware, a solution for developing, deploying, and managing applications; integrating applications, data, and devices; and automating business processes in hybrid cloud environments; Red Hat cloud offerings, a software solution that enables customers to build and manage various cloud computing environments; Red Hat Mobile, a software development platform that enables customers to develop, integrate, deploy, and manage mobile applications for enterprises; and Red Hat Storage, a software solution that enables customers to manage large, unstructured, or semi-structured data in hybrid cloud environments. It also provides consulting, support, and training services; and real-time operating system, distributed computing, directory services, and user authentication. Red Hat, Inc. has a collaboration with Wipro Limited to set up a cloud application factory that offers developers and IT teams a methodology for application modernization across public, private, and hybrid clouds. The company was formerly known as Red Hat Software, Inc. and changed its name to Red Hat, Inc. in June 1999. Red Hat, Inc. was founded in 1993 and is headquartered in Raleigh, North Carolina.
|Name:||Red Hat, Inc.|
Red Hat, Inc.
100 East Davie Street,
North Carolina, 27601,
|Exchange Symbol||Ticker Symbol||Security||Exchange||Country||Currency||Listed on|
|NYSE||RHT||Common Stock||New York Stock Exchange||US||USD||11. Aug 1999|
|DB||RHI||Common Stock||Deutsche Boerse AG||DE||EUR||11. Aug 1999|
|Sector:||Software and Services|