NEW YORK ( TheStreet) -- Quantum Corporation (NYSE: QTM) has been downgraded by TheStreet Ratings from hold to sell. Among the areas we feel are negative, one of the most important has been generally deteriorating net income. Highlights from the ratings report include:
- Compared to its closing price of one year ago, QTM's share price has jumped by 46.30%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
- 44.60% 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 -3.40% significantly underperformed when compared to the industry average.
- QUANTUM CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, QUANTUM CORP's EPS of $0.02 remained unchanged from the prior years' EPS of $0.02. This year, the market expects an improvement in earnings ($0.11 versus $0.02).
- The revenue fell significantly faster than the industry average of 75.4%. Since the same quarter one year prior, revenues slightly dropped by 5.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- 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 93.8% when compared to the same quarter one year ago, falling from -$2.70 million to -$5.23 million.