Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Quantum Corporation’s (NYSE:QTM) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. View our latest analysis for Quantum
How Well Did QTM Perform?
I prefer to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method enables me to examine different companies on a more comparable basis, using the most relevant data points. For Quantum, its most recent earnings (trailing twelve month) is -$8.4M, which, in comparison to last year’s figure, has become less negative. Given that these figures are relatively myopic, I have estimated an annualized five-year value for QTM’s earnings, which stands at -$20.5M. This means even though net income is negative, it has become less negative over the years.
We can further analyze Quantum’s loss by looking at what has been happening in the industry as well as within the company. Initially, I want to quickly look into the line items. Revenue growth over the past few years has been negative at -5.48%. The key to profitability here is to make sure the company’s cost growth is well-controlled. Eyeballing growth from a sector-level, the US tech industry has been growing its average earnings by double-digit 14.10% in the prior twelve months, and a more subdued 6.53% over the past couple of years. This shows that, though Quantum is currently unprofitable, it may have benefited from industry tailwinds, moving earnings towards to right direction.
What does this mean?
Quantum’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that incur net loss is always hard to forecast what will occur going forward, and when. The most useful step is to assess company-specific issues Quantum may be facing and whether management guidance has dependably been met in the past. You should continue to research Quantum to get a more holistic view of the stock by looking at:
1. Financial Health: Is QTM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
2. Valuation: What is QTM worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether QTM is currently mispriced by the market.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.