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iRobot (IRBT) Up 24.1% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for iRobot (IRBT - Free Report) . Shares have added about 24.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is iRobot due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

iRobot Q4 Earnings & Revenues Beat Estimates, Up Y/Y

iRobot reported better-than-expected results for fourth-quarter 2018.

Earnings/Revenues

Quarterly adjusted earnings came in at 84 cents per share, comfortably outpacing the Zacks Consensus Estimate of 51 cents. Also, the bottom line came in higher than the year-ago figure of 54 cents.

Notably, the company reported adjusted earnings of $2.84 for 2018, an increase of 60.5% from the prior year.

Revenues for the quarter came in at $384.7 million, surpassing the consensus estimate of $379 million. The top line also improved 17.7% year over year. The upside stemmed from robust sales secured from Japan.

The company generated revenues of $1,092.6 million in 2018, higher than $883.9 million recorded a year ago.

Costs/Margins

Cost of sales in the reported quarter was $198.2 million, up 14.3% year over year. Gross margin was 48.5%, up 150 basis points (bps).

Total operating expenses in the reported quarter was $156.7 million, up 20.1% year over year. Operating margin was 7.7%, up 70 bps.

Balance Sheet/Cash Flow

Exiting the fourth quarter, iRobot had cash and cash equivalents of $130.4 million, up from $128.6 million recorded as of Dec 30, 2017. Long-term liabilities came in at $17.9 million, down from $23.5 million reported at the end of 2017.

At the end of 2018, iRobot generated $71.7 million cash from operating activities, down from $76.3 million recorded a year ago. Capital expenditure was $32.4 million on Dec 29, 2018, compared with $23.4 million witnessed at the end of 2017.

Outlook

The company anticipates generating revenues in the range of $1.28-$1.31 billion and earnings in the band of $3.00-$3.25 per share in 2019.

By 2020, iRobot intends to secure revenue growth of roughly 19%, gross margin rise of about 48% and operating margin growth of 10%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, iRobot has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise iRobot has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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