By Rob Otman
Red Hat stock had a good day in the market on Thursday November 16. Shares climbed 2.27% and closed the day at $126.63. They’re now trading 0.03% below their 52-week high of $126.67.
With today’s good gain, Red Hat now has a market cap of $23 billion. That makes it a large cap company.
The business operates in the applications software industry and employs 10,500 people. Its shares trade primarily on the New York stock exchange.
Red Hat has 176.95 million shares outstanding and 2.29 million traded hands for the day. That’s above the average 30-day volume of 1.37 million shares.
The amount of Red Hat stock is also dropping as the company buys back its own shares. In the last 12 months, it repurchased $431 million worth.
Over the last five years, Red Hat’s revenue is up by 125.7%. You can see this growth in annual revenue chart below…
In the last year alone, Red Hat’s revenue has grown by 14.68%. That’s a solid sign for Red Hat stock owners.
We like to invest in companies that grow their sales. A growing top line is a sign of a healthy business.
For now, Red Hat will continue to pull in revenue. So let’s take a closer look at the company’s total financial health.
One of the best way to do that is by looking at its balance sheet… Red Hat’s cash comes in at $2 billion and the company’s debt is $746 million…
Red Hat’s cash pile is larger than its total debt. This and a steady cash flow has allowed the company to buy back shares.
What is Red Hat Stock Worth?
Let’s look at a few key ratios to determine the value of Red Hat stock…
Price-to-Earnings (P/E): This ratio comes in at 77.18 for Red Hat. That’s high. A high P/E ratio shows that investors are already expecting high earnings growth.
Price-to-Book (P/B): This ratio is a cornerstone for value investors. A lower number here indicates a better value play. And at 16, Red Hat looks expensive… but P/B varies greatly based on the industry.
These are two great metrics to start with when valuing a company. But company analysis should go much further.
Keep an eye out for more of my analysis.
Rob Otman
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Source:: Investment You
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