Rackspace Technology Inc. Common Stock (RXT)

FairStock Score: 29/100 — RISKY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

As a student of Graham and Buffett, I start with business quality and staying power. Rackspace runs hybrid cloud and AI infrastructure services, but the numbers show a business that has struggled to earn durable profits. In fiscal Q2 2026, the quarter ended 2026-06-30, revenue was $670.1 million and net income was negative $67.5 million, or negative $0.27 per diluted share. That was worse than fiscal Q2 2025, the quarter ended 2025-06-30, when net income was negative $54.5 million, or negative $0.23 per diluted share, even though revenue was only slightly lower at $666.3 million. Fiscal Q1 2026, the quarter ended 2026-03-31, did show $8.3 million of net income, or $0.03 per diluted share—an encouraging blip, but not a trend. For full fiscal 2025, the year ended 2025-12-31, revenue was $2.7 billion and net income was negative $225.8 million, or negative $0.95 per diluted share. Fiscal 2024 and fiscal 2023 lost $858.2 million and $837.8 million, respectively. At the 2026-10-13 close of $3.63, market cap was $395.1 million. FairStock's P/E is negative 5.58, and its FCF yield is 10.4% on $41.0 million of trailing free cash flow. Positive cash generation is a real plus, but the Piotroski F-Score of 2/9 and Altman Z-Score of negative 1.84 suggest weak financial health. ROCE is negative 0.96%, and the Lynch screen finds no category because the company lost money in each of the last four years. I see little evidence of a moat: flat revenue, repeated losses, and negative returns on capital. The stock may look statistically cheap against cash flow, but a beta of 3.10 and a 52-week range of $0.39 to $8.60 show how unstable the equity has been. Without a path to consistent profits, this remains speculative, not a classic value investment.

In plain English: Rackspace helps companies manage cloud computing and artificial intelligence systems. It has lost money in each of the last four years, and sales are barely growing, so the business looks weak. At $3.63 on 2026-10-13, the price looks low compared with the cash the business generates, but the losses make it a risky cheap-looking stock.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer