How Does Red Hat Compare to Its Peers?

Red Hat and its peers

An analysis of Red Hat’s income statement in 2Q16 follows:

  • The gross profit margins of Red Hat (RHT), VMware (VMW), EMC (EMC), Citrix Systems (CTXS), Oracle (ORCL), and Hewlett-Packard (HPQ) are 84.93%, 83.56%, 59.81%, 83.34%, 78.10%, and 23.80%, respectively.
  • The EPS (earnings per share) of Red Hat, VMware, EMC, Citrix Systems, Oracle, and Hewlett-Packard are $0.28, $0.40, $0.26, $0.72, $0.42, and $0.77, respectively.

An analysis of Red Hat’s balance sheet in 2Q16 follows:

  • The current ratios of Red Hat, VMware, EMC, Citrix Systems, Oracle, and Hewlett-Packard are 1.35, 2.20, 1.13, 1.04, 4.04, and 1.06, respectively.

How Does Red Hat Compare to Its Peers?

An analysis of Red Hat’s valuation follows:

  • The PE (price-to-earnings) ratios of Red Hat, VMware, EMC, Citrix Systems, Oracle, and Hewlett-Packard are 72.00x, 38.75x, 19.80x, 43.14x, 17.29x, and 10.79x, respectively.
  • The PBV (price-to-book value) ratios of Red Hat, VMware, EMC, Citrix Systems, Oracle, and Hewlett-Packard are 9.87x, 4.64x, 2.32x, 5.28x, 3.38x, and 1.77x, respectively.

According to the above findings, Red Hat has outperformed its peers based on the gross profit margin, current ratio, PE ratio, and PBV ratio.

ETFs that invest in Red Hat Inc.

The First Trust ISE Cloud Computing Index Fund (SKYY) invests 3.50% of its holdings in Red Hat. SKYY tracks a tiered and equal-weighted index of companies involved in the cloud computing industry.

The iShares S&P North American Technology-Software ETF (IGV) invests 2.97% of its holdings in Red Hat. IGV tracks a market-cap-weighted index of US and Canadian software companies.

The Columbia Growth Equity Strategy ETF (RPX) invests 1.77% of its holdings in Red Hat. RPX seeks to invest in primarily in US firms with above-average growth expectations. The actively managed fund uses fundamental research to identify 60–80 firms across the market-cap spectrum.

ETFs that invest in Red Hat

An analysis of Red Hat’s price movement follows:

  • The YTD (year-to-date) price movements of Red Hat, SKYY, IGV, and RPX are 5.18%, 1.66%, 4.44%, and 4.78%, respectively.

An analysis of Red Hat’s valuation follows:

  • The PE ratios of Red Hat, SKYY, IGV, and RPX are 72.00x, 37.27x, 47.05x, and 29.72x, respectively.
  • The PBV ratios of Red Hat, SKYY, IGV, and RPX are 9.87x, 4.00x, 4.97x, and 4.95x, respectively.

According to the above findings, Red Hat has outperformed its ETFs based on the price movement, PE ratio, and PBv ratio.