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Is this Large Market Cap Stock target price reasonable for Rackspace Hosting, Inc. (NYSE:RAX)?

The company in question is, Rackspace Hosting, Inc. (NYSE:RAX) currently with a stock price of 31.76 (-0.16% today). The market cap for Rackspace Hosting, Inc. is 3996.93, and is in the sector Technology, and Information Technology Services industry. The target price for Rackspace Hosting, Inc. is 30.9. Currently Rackspace Hosting, Inc. is trading with a P/E of 27.64, and a forward P/E of 28.18. Average volume for Rackspace Hosting, Inc. is 3706.35 and so far today it is 1503211.

Performance in the last year for Rackspace Hosting, Inc. has been 23.68%. For EPS growth, Rackspace Hosting, Inc. has seen a growth of 17.00%, and is looking to grow in the next year to 4.15%. More long term stats show that EPS growth has been 20.80% over the last five years and could be 16.90% for the next five years. Rackspace Hosting, Inc. has seen sales growth quarter over quarter at 7.00%, with EPS growth quarter over quarter at 43.90%. The 20-day simple moving average is 3.65%, with the 200-day simple moving average coming to 31.17%.

Since the IPO date for Rackspace Hosting, Inc. on the 08/08/2008, Rackspace Hosting, Inc. has seen performance year to date to be 25.63%. With Rackspace Hosting, Inc. trading at 31.76, the dividend yield is *TBA, and the EPS is 1.15.

So could Rackspace Hosting, Inc., be undervalued? Well as said before P/E is 27.64. The PEG is 1.64, P/S is 1.93 and the P/B is at 4.19. The P/cash is 7.34, with P/free cash flow at 31.18.

Rackspace Hosting, Inc. ability to deal with debt shows that the current ratio is 3.1, and the quick ratio is 3.1. This is with long term debt/equity at 0.67, and total debt/equity at 0.68.

In terms of margins, Rackspace Hosting, Inc. has a gross margin of 66.10%, an operating margin of 12.70% and a profit margin of 7.40%.Payout ratio for Rackspace Hosting, Inc. is 0.00%. Return on assets come to 7.90% with return on investment coming to 8.50%.

Insider ownership for Rackspace Hosting, Inc., is at 1.00% and institutional ownership comes to 86.20%. Outstanding shares are at 125.65. While shares float is 105.46. The float short is currently 7.09%, and short ratio is 2.02.

Disclaimer: Remember there is a risk to your investment, this is not a recommendation, nor personal advice, never invest more than you are able too loose.

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Mark Hines

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