Red Hat (NYSE: RHT) is one of 118 publicly-traded companies in the “Software” industry, but how does it contrast to its rivals? We will compare Red Hat to related businesses based on the strength of its earnings, dividends, valuation, institutional ownership, analyst recommendations, risk and profitability.

Profitability

This table compares Red Hat and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Red Hat 13.39% 28.72% 8.49%
Red Hat Competitors -45.26% -25.32% -10.02%

Analyst Recommendations

This is a summary of current ratings and price targets for Red Hat and its rivals, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Red Hat 0 9 22 0 2.71
Red Hat Competitors 264 2011 4278 84 2.63

Red Hat presently has a consensus price target of $112.48, indicating a potential downside of 7.65%. As a group, “Software” companies have a potential upside of 4.44%. Given Red Hat’s rivals higher possible upside, analysts plainly believe Red Hat has less favorable growth aspects than its rivals.

Volatility & Risk

Red Hat has a beta of 1.25, meaning that its share price is 25% more volatile than the S&P 500. Comparatively, Red Hat’s rivals have a beta of 0.98, meaning that their average share price is 2% less volatile than the S&P 500.

Valuation and Earnings

This table compares Red Hat and its rivals revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Red Hat $2.64 billion $489.77 million 73.37
Red Hat Competitors $1.49 billion $438.72 million 39.74

Red Hat has higher revenue and earnings than its rivals. Red Hat is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Institutional & Insider Ownership

94.0% of Red Hat shares are held by institutional investors. Comparatively, 58.4% of shares of all “Software” companies are held by institutional investors. 0.7% of Red Hat shares are held by company insiders. Comparatively, 20.0% of shares of all “Software” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Red Hat beats its rivals on 10 of the 13 factors compared.

About Red Hat

Red Hat, Inc. (Red Hat) provides open source software solutions, using a community-powered approach to develop and offer operating system, virtualization, management, middleware, cloud, mobile and storage technologies. Red Hat operates through three geographical segments: the Americas, including the United States, Canada and Latin America; EMEA, including Europe, Middle East and Africa, and Asia Pacific. Its products and services include infrastructure-related offerings, application development-related and other technology offerings, and consulting, support and training services. Its infrastructure-related offerings include Red Hat Enterprise Linux, Red Hat Satellite and Red Hat Enterprise Virtualization. Its application development-related and other technology offerings include Red Hat JBoss Middleware, Red Hat cloud offerings, Red Hat Mobile and Red Hat Storage. Its consulting services include upgrade planning, platform migrations, solution integration and application development.

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