Red Hat (NYSE: RHT) is one of 120 publicly-traded companies in the “Software” industry, but how does it weigh in compared to its peers? We will compare Red Hat to related companies based on the strength of its valuation, profitability, risk, dividends, analyst recommendations, institutional ownership and earnings.

Risk and Volatility

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

Profitability

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

Net Margins Return on Equity Return on Assets
Red Hat 11.49% 25.27% 7.43%
Red Hat Competitors -44.90% -26.01% -9.67%

Insider & Institutional Ownership

94.8% of Red Hat shares are owned by institutional investors. Comparatively, 60.6% of shares of all “Software” companies are owned by institutional investors. 0.7% of Red Hat shares are owned by company insiders. Comparatively, 17.5% of shares of all “Software” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Red Hat and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Red Hat 1 8 22 0 2.68
Red Hat Competitors 275 2071 4380 86 2.63

Red Hat currently has a consensus target price of $112.48, indicating a potential downside of 6.91%. As a group, “Software” companies have a potential upside of 1.70%. Given Red Hat’s peers higher possible upside, analysts plainly believe Red Hat has less favorable growth aspects than its peers.

Earnings and Valuation

This table compares Red Hat and its peers top-line revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Red Hat $2.64 billion $489.77 million 72.79
Red Hat Competitors $1.52 billion $446.84 million 11.22

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

Summary

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

Red Hat Company Profile

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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