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Red Hat Inc. (RHT - Snapshot Report) is set to report its fourth quarter 2013 results on Mar 27. In the previous quarter, the company’s earnings matched the Zacks Consensus Estimate. Let’s see how things are shaping up for the company in this quarter.

Growth Factors this Past Quarter

Red Hat reported encouraging top-line growth in the third quarter of 2013 but higher-than-expected operating expenses led to a contraction in the bottom line. The robust top-line growth was due to higher subscription and training & services revenues.

For the fourth quarter of 2013, Red Hat expects revenues in the range of $347.0 million to $350.0 million, reflecting a year-over-year increase of 17% to 18%. Earnings on a non-GAAP basis are projected to be in the range of 29 cents to 30 cents per share. Management expects non-GAAP operating margin of around 24.0%.

Earnings Whispers?

The Zacks Consensus Estimate for the fourth quarter stands at 21 cents per share while that for fiscal 2013 is 82 cents per share.

There have been no revisions to the fourth quarter and 2013 estimates over the last 60 days. As a result, the Zacks Consensus Estimate for the two periods has not moved in any direction.

The lack of downward movement in estimates signals that fourth-quarter results are likely to come in line with expectations. This is also indicated by the fact that the stock carries a Zacks Rank #3 (Hold).

We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Our model states that a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, #2 or #3 to beat the earnings estimates. You could, however, consider the following stocks that satisfy both criteria:

Symantec Corp. (SYMC - Analyst Report) has a Zacks Rank #1 (Strong Buy) and Zacks Earnings ESP of +5.88%.

Netflix Inc. (NFLX - Analyst Report) has a Zacks Rank #2 (Buy) and Zacks Earnings ESP of +5.56%.

VMware Inc. (VMW - Snapshot Report) has a Zacks Rank #3 (Hold) and Zacks Earnings ESP of +2.17.

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