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Quantum Up 322% in the Past 6 Months: Time to Buy, Hold or Sell?
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Key Takeaways
Quantum's revenue rose 25.7% as enterprise demand lifted ActiveScale and tape storage sales.
Tape adoption is growing, with capacity shipments up 15% sequentially and deal sizes increasing.
Supply constraints limit near-term revenue, while Quantum expects about $82 million in second-quarter sales.
Quantum Corporation’s (QMCO - Free Report) shares have surged 322.3% in the past six months, outperforming the Zacks Computer & Technology sector’s growth of 20.7% and the Zacks Computer- Storage Devices industry’s rise of 108.8%. The S&P 500 composite is up 12.9% over the same time frame.
The company has also outperformed its peers, Dell Technologies Inc. (DELL - Free Report) , NetApp, Inc. (NTAP - Free Report) and International Business Machines Corporation (IBM - Free Report) . DELL and NTAP have gained 264.9% and 90.9%, respectively, while IBM declined 2.2% in the same time frame.
Image Source: Zacks Investment Research
Quantum is gaining from strong enterprise demand and growing ActiveScale and tape adoption. However, supply constraints, particularly for tape drives, remain a concern.
Let us take a closer look at QMCO’s fundamentals, key growth drivers, competitive strengths and potential risks to assess whether the stock remains an attractive investment.
Factors to Consider
Quantum is gaining from strong enterprise demand, particularly for its ActiveScale and tape storage solutions, as customers look to manage rapidly growing data volumes while controlling storage costs, power consumption and infrastructure complexity. In the fiscal first quarter, 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. Revenue growth was broad-based, with the Americas increasing more than 20% sequentially and APAC rising more than 50%.
The company is also benefiting from growing adoption of tape technologies, supported by customers’ focus on storage economics, lower power consumption and cyber resilience. Tape-related royalty revenue remained strong, while recent LTO shipment data showed capacity shipments increasing 15% sequentially. The company’s tape opportunity funnel reached its highest level in years, and it saw a sharp increase in deals valued at more than $1 million, with most exceeding $3 million. ActiveScale combined with tape remained a key offering, highlighted by a significant renewal and expansion with a leading European biometrics institution.
Quantum is further gaining from larger and more strategic customer opportunities. The company secured a hyperscaler deployment in APAC centered on its Scalar i7 tape library, with the transaction valued at well over eight figures. The i7’s density and power efficiency helped the company secure the win. On the last earnings call, management stated that many of the large deals signed during the quarter were enterprise opportunities, reflecting stronger traction for ActiveScale among large customers. As ActiveScale expands within enterprises, Quantum expects large deals to become an increasingly important part of its growth.
The company’s improving financial performance is another positive factor. GAAP gross margin increased to 39.3%, its highest level in five quarters, supported by stronger pricing, disciplined cost execution, favorable standard costs and inventory performance, as well as fixed-cost leverage. Non-GAAP operating expenses declined 16% year over year despite higher revenue, while adjusted EBITDA reached $8 million. 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.
Quantum Corporation Price, Consensus and EPS Surprise
However, supply constraints remain the biggest hurdle for Quantum, as customer demand continues to exceed the company’s ability to fulfill orders. Tape-drive availability and certain disk-drive constraints persisted during the quarter, while component availability and pricing pressures remain areas of focus. Management expects conditions to improve during the year, but tape-drive supply was still inadequate as of August, limiting the company’s ability to convert its strong backlog and bookings into near-term revenue.
The company also expects some pressure on near-term profitability as it increases investments in R&D and incurs higher sales commissions following stronger revenue performance. Management is taking a conservative approach to margins because of uncertainty surrounding several large deals. 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.
QMCO’s Valuation
QMCO’s shares are trading at a forward 12-month price/sales ratio of 2.6, lower than the industry’s 3.35. DELL, NTAP and IBM trade at a forward 12-month P/E of 1.62X, 4.41X and 3.12X, respectively.
Image Source: Zacks Investment Research
QMCO’s Upward Estimates
The Zacks Consensus Estimate for QMCO’s earnings for fiscal 2026 has been revised significantly upward over the past 30 days.
Image Source: Zacks Investment Research
What Should You Do With QMCO Stock Now?
Given QMCO’s strong enterprise demand, growing tape adoption and improving financial performance, the stock’s growth outlook remains encouraging. So, it seems like a good time to add the stock to your portfolio.
View the Zacks #1 Rank List
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Quantum Up 322% in the Past 6 Months: Time to Buy, Hold or Sell?
Key Takeaways
Quantum Corporation’s (QMCO - Free Report) shares have surged 322.3% in the past six months, outperforming the Zacks Computer & Technology sector’s growth of 20.7% and the Zacks Computer- Storage Devices industry’s rise of 108.8%. The S&P 500 composite is up 12.9% over the same time frame.
The company has also outperformed its peers, Dell Technologies Inc. (DELL - Free Report) , NetApp, Inc. (NTAP - Free Report) and International Business Machines Corporation (IBM - Free Report) . DELL and NTAP have gained 264.9% and 90.9%, respectively, while IBM declined 2.2% in the same time frame.
Image Source: Zacks Investment Research
Quantum is gaining from strong enterprise demand and growing ActiveScale and tape adoption. However, supply constraints, particularly for tape drives, remain a concern.
Let us take a closer look at QMCO’s fundamentals, key growth drivers, competitive strengths and potential risks to assess whether the stock remains an attractive investment.
Factors to Consider
Quantum is gaining from strong enterprise demand, particularly for its ActiveScale and tape storage solutions, as customers look to manage rapidly growing data volumes while controlling storage costs, power consumption and infrastructure complexity. In the fiscal first quarter, 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. Revenue growth was broad-based, with the Americas increasing more than 20% sequentially and APAC rising more than 50%.
The company is also benefiting from growing adoption of tape technologies, supported by customers’ focus on storage economics, lower power consumption and cyber resilience. Tape-related royalty revenue remained strong, while recent LTO shipment data showed capacity shipments increasing 15% sequentially. The company’s tape opportunity funnel reached its highest level in years, and it saw a sharp increase in deals valued at more than $1 million, with most exceeding $3 million. ActiveScale combined with tape remained a key offering, highlighted by a significant renewal and expansion with a leading European biometrics institution.
Quantum is further gaining from larger and more strategic customer opportunities. The company secured a hyperscaler deployment in APAC centered on its Scalar i7 tape library, with the transaction valued at well over eight figures. The i7’s density and power efficiency helped the company secure the win. On the last earnings call, management stated that many of the large deals signed during the quarter were enterprise opportunities, reflecting stronger traction for ActiveScale among large customers. As ActiveScale expands within enterprises, Quantum expects large deals to become an increasingly important part of its growth.
The company’s improving financial performance is another positive factor. GAAP gross margin increased to 39.3%, its highest level in five quarters, supported by stronger pricing, disciplined cost execution, favorable standard costs and inventory performance, as well as fixed-cost leverage. Non-GAAP operating expenses declined 16% year over year despite higher revenue, while adjusted EBITDA reached $8 million. 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.
Quantum Corporation Price, Consensus and EPS Surprise
Quantum Corporation price-consensus-eps-surprise-chart | Quantum Corporation Quote
However, supply constraints remain the biggest hurdle for Quantum, as customer demand continues to exceed the company’s ability to fulfill orders. Tape-drive availability and certain disk-drive constraints persisted during the quarter, while component availability and pricing pressures remain areas of focus. Management expects conditions to improve during the year, but tape-drive supply was still inadequate as of August, limiting the company’s ability to convert its strong backlog and bookings into near-term revenue.
The company also expects some pressure on near-term profitability as it increases investments in R&D and incurs higher sales commissions following stronger revenue performance. Management is taking a conservative approach to margins because of uncertainty surrounding several large deals. 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.
QMCO’s Valuation
QMCO’s shares are trading at a forward 12-month price/sales ratio of 2.6, lower than the industry’s 3.35. DELL, NTAP and IBM trade at a forward 12-month P/E of 1.62X, 4.41X and 3.12X, respectively.
Image Source: Zacks Investment Research
QMCO’s Upward Estimates
The Zacks Consensus Estimate for QMCO’s earnings for fiscal 2026 has been revised significantly upward over the past 30 days.
Image Source: Zacks Investment Research
What Should You Do With QMCO Stock Now?
Given QMCO’s strong enterprise demand, growing tape adoption and improving financial performance, the stock’s growth outlook remains encouraging. So, it seems like a good time to add the stock to your portfolio.
Currently, Quantum carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.