NEW YORK (TheStreet) -- Shares of Quantum (QTM) - Get Report were gaining 20.1% to $1.79 on heavy trading volume Friday after the data storage device company announced its preliminary fiscal fourth quarter results.

Quantum said that its revenue for the fiscal fourth quarter was more than $145 million, up about 15% from the year-ago quarter, and above the company's previous guidance of $130 million to $135 million for the quarter. Analysts expect the company to report revenue of $131.2 million for the quarter.

The company said it now expects to report earnings of 4 cents a share for the fiscal fourth quarter, above analysts' estimates of 2 cents a share.

Quantum said that branded revenue was more than $120 million in the fiscal fourth quarter, up from $102 million in the year-ago quarter.

About 2.8 million shares of Quantum were traded by 10:14 a.m. Friday, above the company's average trading volume of about 1.2 million shares a day.

TST Recommends

TheStreet Ratings team rates QUANTUM CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate QUANTUM CORP (QTM) 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. Among the areas we feel are negative, one of the most important has been weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly decreased to $2.57 million or 64.88% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The revenue fell significantly faster than the industry average of 31.8%. Since the same quarter one year prior, revenues slightly dropped by 2.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 47.39% is the gross profit margin for QUANTUM CORP which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, QTM's net profit margin of 4.87% significantly trails the industry average.
  • This stock has increased by 27.86% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in QTM do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
  • QUANTUM CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, QUANTUM CORP continued to lose money by earning -$0.09 versus -$0.22 in the prior year. This year, the market expects an improvement in earnings ($0.09 versus -$0.09).
  • You can view the full analysis from the report here: QTM Ratings Report

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