Red Hat Inc (RHT) To Kick Off Another Week Of Big Earnings Reports

Red Hat Inc (NYSE:RHT)

The Linux, an open-source operating system used by several governments and enterprises across the globe, provider is expected to report earnings for the fiscal fourth quarter, ended February, on Monday (Mar. 27) after the market closes. Investors would weigh RHT’s results against the EPS and revenue expectations of $0.61 and $618.6 million. This compares to a-year-ago quarter’s $0.52 in EPS and revenue of $543.5 million. Despite an 18% revenue growth led by a nearly 32% growth in its cloud-enabling-technologies business in the previous quarter, RHT shares had crashed more than 10% as the company pointed out some delays related to big-ticket deals to be signed with the government and a lackluster guidance for fiscal Q4. RHT shares have made a full recovery since and now trade above 4% the price-level before it reported fiscal Q3 earnings. At a $15 billion valuation, RHT, with a trailing PE of near 62, is priced like a high-growth company and that’s what investors would be focussing on — top-line growth, profit margins, and guidance for the year ahead. Analysts estimate for FY’18 stand at $2.59 (GAAP–$1.54) in EPS and $2,706.6 million in revenue, a guidance higher than this can push RHT shares well beyond the 52-week high, which stands 2.4% above the current share price of $82.96. However, any signs of slowing growth may trigger a sell-off as investors reevaluate what they are willing to pay to own RHT shares. Check out our latest analysis on RHT.

Other notable names reporting in the week ahead

Carnival Corp (NYSE:CCL): A cruise company with a market capitalization of $42 billion, CCL returned to growth in FY’16 (ended November 2016) after a nearly 1% decline in the top-line during FY’15. Not only that, CCL shares are up almost 20% over the past year as profit margins improved substantially — CCL recorded an EBIT margin of 18.5% in FY’16, compared to 11.2% in FY’15. CCL is expected to report fiscal first quarter results on Tuesday (Mar. 28) before the market opens — EPS and revenue expectations are set at $0.35 and $3.78 billion. CCL is a well run ship riding a secular growth wave in the tourism industry, an earnings beat can take company shares beyond the 52-week-high of $59.12. Check out our latest analysis on CCL. Paychex Inc  (NASDAQ:PAYX): A $22 billion company, the payroll and human resource outsourcing solutions provider to the small and medium sized companies is expected to report fiscal third quarter earnings on Wednesday (Mar. 29) before the market opens. PAYX EPS and revenue for the quarter will be weighed against the consensus estimates of $0.54 in EPS and a revenue of $799.3 million. PAYX is one of the few companies that can boast of only one down-year over the past 25 years, driven by a steadily growing clientele. Despite shares trading at all-time-highs, PAYX shares can move significantly higher on a strong earnings beat—being one of the few companies that pay a nearly 3% dividend and generate a net income margin of more than 25%. Check out our latest analysis on PAYX.