Rackspace (NYSE: RAX) is set to report Q1 earnings after the market closes today. Consensus analyst expectations for today's earnings release are revenues of approximately 300M and earnings per share of $0.18. Revenue of 300M would represent growth of about 30% from the same quarter last fiscal year. The current analyst consensus EPS estimate is the same as it was 60 days ago.
Benzinga reached out to analyst Clayton Moran of The Benchmark Company to get his take on today's release. Moran's estimates are generally in line with the consensus. In today's earnings report, Moran says he will be paying special attention to revenue growth and installed base growth. He also says he believes Rackspace's Private Edition cloud will contribute to growth and potentially achieve a very high margin.
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“It's a growth story” states Moran. “We think the company is benefitting from some strong secular growth trends.” Moreover, Moran does not expect Rackspace to undertake any dramatic acquisitions or business model changes in the near future. However, Moran notes that Rackspace could be a potential takeover candidate. He adds that the potential acquirer could be anyone from AT&T, which has been rumored in the past, to HP or Dell.
The cloud computing service provider currently has a market capitalization of $7.85 Billion and a short interest that is 6.95% of the company's float. The company's current PEG ratio is 3.39. Shares of Rackspace are currently trading at around $58.50, an increase of approximately 35% year to date.
Disclosure: At the time of this writing, I did not own shares of any companies mentioned in this post.
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