NEW YORK (TheStreet) -- Shares of Quantum Corp. (QTM) - Get Report are surging 6.86% to $1.09 after it announced preliminary revenue results for the second quarter of fiscal year 2015, that are higher than analysts' expectations.

The company now forecasts a total revenue increase of 3% from last year of approximately $135 million, the top end of its July guidance range of $130 million to $135 million, and higher than analysts' estimates of $132.6 million.

Quantum expects branded revenue of approximately $107 million, up 6% year over year, driven largely by the 50% growth in its scale-out storage revenue.

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The California-based company said it sees continued improvement in profitability as the result of revenue growth and greater operational efficiency.

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Quantum provides scale-out storage, archive and data protection solutions for capturing, sharing and preserving digital assets in physical and virtual environments.

Separately, 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 a few notable 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 unimpressive growth in net income, weak operating cash flow and generally disappointing historical performance in the stock itself."

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 231.8% when compared to the same quarter one year ago, falling from $3.28 million to -$4.32 million.
  • Net operating cash flow has decreased to $6.27 million or 31.60% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.86%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 300.00% compared to the year-earlier 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.
  • QTM, with its decline in revenue, underperformed when compared the industry average of 9.2%. Since the same quarter one year prior, revenues fell by 13.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • 45.45% is the gross profit margin for QUANTUM CORP which we consider to be strong. Regardless of QTM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, QTM's net profit margin of -3.37% significantly underperformed when compared to the industry average.
  • You can view the full analysis from the report here: QTM Ratings Report

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