NEW YORK (TheStreet) -- Shares of Overland Storage Inc. (OVRL) are surging, up 32.35% to $4.09, after the company announced it expects to exceed $24 million in net revenue for its fiscal fourth quarter, up from $20 million from the third fiscal quarter.
Overland CEO Eric Kelly said, "We are seeing positive customer responses to the combination of Overland and Tandberg, and are progressing towards achieving the operational efficiencies required to return to profitability."
The data solutions company recently announced its proposed merger with Sphere 3D Corporation (ANY).
Separately, TheStreet Ratings team rates OVERLAND STORAGE INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate OVERLAND STORAGE INC (OVRL) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, weak operating cash flow and generally disappointing historical performance in the stock itself."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Computers & Peripherals industry. The net income has significantly decreased by 30.4% when compared to the same quarter one year ago, falling from -$5.09 million to -$6.63 million.
- Net operating cash flow has significantly decreased to -$6.46 million or 124.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- OVRL's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 44.29%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- Despite currently having a low debt-to-equity ratio of 0.34, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.70 is weak.
- Compared to other companies in the Computers & Peripherals industry and the overall market, OVERLAND STORAGE INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: OVRL Ratings Report