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Will Q2 Earnings Hold a Surprise for iRobot (IRBT) Stock?

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Premium appliances company iRobot Corporation (IRBT - Free Report) is scheduled to report second-quarter 2016 results after the opening bell on Jul 26.

Over the last four quarters, the company delivered a positive average earnings surprise of 239.77%, beating estimates in each of the quarters. Let’s see how things are shaping up for this announcement.

Factors to Play

iRobot’s strategic divestiture of Defense & Security business and improving Home Robotics trade is expected to boost its revenues and margins in the to-be-reported quarter.

In sync with its innovation-based growth strategy, the company recently launched a number of unique Home Robotics products that are likely to boost sales in the second quarter. Also, unique marketing programs and incremental investments are expected to boost the upcoming earnings.

However, iRobot remains exposed to certain headwinds like high volatility in consumers’ brand loyalty, lower wage increase, high income inequality in the U.S. as well as lackluster economic performance in emerging markets. Negatives like these might hurt revenues and hence, margins, in second quarter.

Share price of the company as of Jul 21, 2016 was $36.50 per share. We expect release of second-quarter results to result in stock price movement in the near term.  

IROBOT CORP Price and EPS Surprise

IROBOT CORP Price and EPS Surprise | IROBOT CORP Quote

Earnings Whispers: Our proven model does not conclusively state that iRobot is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this. That is not the case here as we will see below.

Zacks ESP: iRobot has a 0.00% Earnings ESP for the quarter as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 11 cents.

Zacks Rank: iRobot’s Zacks Rank #3. However, a 0.00% ESP makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some companies you may want to consider, as our model shows these stocks have the right combination of elements to post an earnings beat this quarter:

Callaway Golf Co. with an Earnings ESP of +12.12% and a Zacks Rank #1.

Boyd Gaming Corporation (BYD - Free Report) with an Earnings ESP of +3.33% and a Zacks Rank #2.

Liberty Broadband Corporation (LBRDA - Free Report) with an Earnings ESP of +71.43% and a Zacks Rank #2.

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