Red Hat (RHT) stock is having a relatively poor year so far. The American multinational open-source software providing company is down more than 10% since January, while the S&P 500 index is up nearly 25% year-to-date.
Red Hat is expected to report FQ3 2014 earnings on Thursday, December 19th. The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for RHT to report 35c EPS and $382.41M revenue while the current Estimize consensus from 9 Buy Side and Independent contributing analysts is 36c EPS and $386.38M revenue. The Estimize consensus is more accurate than Wall Street up to 69.5% of the time because it represents unbiased market expectations. By tapping into a wider distribution of over 3,300 contributors including hedge fund and independent analysts as well as students and non professionals, Estimize is better able to capture the true market outlook.
Over the past 6 quarters the Estimize community has been more accurate than Wall Street in forecasting Red Hat's EPS and revenue 4 out of 6 times each. The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we're seeing a larger differential between the Estimize and Wall Street revenue numbers compared to previous quarters.
Over the past four months the Wall Street consensus trend for EPS has remained flat at 35c, while Wall Street revenue expectations decreased early in the period and remained at $382.41M. The Estimize EPS consensus has fallen from 37c to 36c and the Estimize revenue consensus has decreased from $386.87M to $386.38M.
The distribution of estimates published by analysts on Estimize range from 3c to 39c EPS and $376.16M to $390.80M in revenues. This quarter we are seeing a larger than usual distribution of estimates. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, a smaller vice versa.
The analyst with the highest estimate confidence rating this quarter is anmikyoso who projects 37c EPS and $390.80M in revenue. Estimate confidence ratings are calculated through algorithms developed by our deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the analyst with the top confidence rating, who is also ranked 31 overall among over 3,300 contributing analysts, is making a call that is more bullish than the majority of our community.
This quarter the Estimize community is expecting a better than Wall Street report from Red Hat. If the software company can impress the analysts it could help to alleviate some of this year's losses and start some momentum going into the new year.
Disclosure: No positions