Strength Seen in Quantum Corp. (QMCO): Can Its 13.6% Jump Turn into More Strength?

Quantum Corp. (QMCO) shares rallied 13.6% in the last trading session to close at $29.49. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 11.9% gain over the past four weeks.

The increase in share price can be attributed to rising data-storage demand as customers face surging data volumes, power constraints and infrastructure-cost pressures. Its ActiveScale, tape storage and tiered architectures help lower costs, reduce power use and improve data resilience. Larger enterprise deployments and repeat ActiveScale expansions also create follow-on revenue opportunities.

This was amplified by strong recent operating momentum, wherein the company’s revenue rose 25.7% year over year to $80.8 million, exceeding the high end of its guidance, while backlog increased significantly. The company also generated positive operating cash flow and eliminated its debt, ending the quarter with $54.6 million in cash. Management expects interest expense to remain minimal going forward, supporting the company’s financial position. While Quantum expects fiscal second-quarter revenue of approximately $82 million, the outlook remains influenced by its ability to secure sufficient supply and fulfill customer orders.

This computer storage device maker is expected to post quarterly earnings of $0.12 per share in its upcoming report, which represents a year-over-year change of +122.2%. Revenues are expected to be $82 million, up 30.7% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Quantum Corp., the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on QMCO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Quantum Corp. is part of the Zacks Computer- Storage Devices industry. Western Digital (WDC), another stock in the same industry, closed the last trading session 4.9% lower at $450.31. WDC has returned 1% in the past month.

Western Digital's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $4.07. Compared to the company's year-ago EPS, this represents a change of +128.7%. Western Digital currently boasts a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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