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iRobot Corporation (IRBT - Free Report) is benefiting from solid product offerings and customer base. Innovation capabilities, expansionary vision, operational initiatives and manufacturing in China and Malaysia should drive the company’s growth. Also, iRobot continues to invest in higher-value robotics, computer vision, machine learning and complex mechanical design to improve the core functionality of the robots, which is expected to be beneficial in the quarters ahead.
The company’s diversified product portfolio has been benefiting it over time. The company noted that revenues generated from selling premium and mid-tier robots represented 83% of the fourth quarter’s total robot revenues. iRobot remains focused on introducing new products into the market and innovating the existing ones. Some of iRobot's recent product innovations include the enhanced version of the Genius Home Intelligence platform, the iRobot H1 handheld vacuum and the Roomba j7+ robot vacuum. Also, the company launched the Roomba Combo i5+, Roomba Combo j5+, Roomba j9+ and Roomba Combo j9+ in September 2023. It also launched two upgrades to the iRobot operating system in 2023.
IRBT is focused on expanding its recurring revenue sources, direct-to-consumer sales channel and business from the online platform. Revenues generated from the online platform to the non-U.S. customers, including Home App, online source of retailers, e-commerce sites and the company’s website, were 51.8% of iRobot’s 2023 revenues. In addition, investments to build brand awareness via campaigning through traditional retail partners on its app and website, and online retailers are likely to significantly boost product demands in the quarters ahead.
However, iRobot’s robot units shipped decreased 27.5% year over year in 2023 due to lower orders from retailers and distributors, primarily driven by a decline in consumer sentiment and increased pricing competition in the market. The company’s revenues declined 24.7% year over year in 2023 due to lower orders. Due to the soft order trend, iRobot expects revenues in the range of $825-$865 million in 2024, indicating a year-over-year decrease of 5.2%.
Increasing promotional activities, suboptimal absorption of fixed operational costs, higher losses related to purchase commitments with the contract manufacturers and excess and obsolete inventory write-downs are affecting the company’s margin performance. In 2023, iRobot recorded an adjusted operating loss of $264.1 million, up 9.9% year over year. The adjusted operating margin was (22.3%) in 2023 versus (14.6%) in the year-ago quarter. The company expects an operating margin of approximately (5%) - (7%) for 2024, with an operating loss in the first half of the year.
In the past year, this Zacks Rank #3 (Hold) company has declined 75.6% compared with the industry’s 1.9% decrease.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
ATMU’s earnings estimates have increased 2.9% for 2024 in the past 60 days. Shares of Atmus Filtration have risen 20.7% in the past year.
Tetra Tech, Inc. (TTEK - Free Report) currently carries a Zacks Rank #2 (Buy). It delivered a trailing four-quarter average earnings surprise of 14.4%.
In the past 60 days, the Zacks Consensus Estimate for TTEK’s fiscal 2024 earnings has increased 2.9%. The stock has soared 30.9% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently has a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.7% in the past 60 days. The stock has gained 35.1% in the past year.
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iRobot (IRBT) Exhibits Strong Prospects Despite Headwinds
iRobot Corporation (IRBT - Free Report) is benefiting from solid product offerings and customer base. Innovation capabilities, expansionary vision, operational initiatives and manufacturing in China and Malaysia should drive the company’s growth. Also, iRobot continues to invest in higher-value robotics, computer vision, machine learning and complex mechanical design to improve the core functionality of the robots, which is expected to be beneficial in the quarters ahead.
The company’s diversified product portfolio has been benefiting it over time. The company noted that revenues generated from selling premium and mid-tier robots represented 83% of the fourth quarter’s total robot revenues. iRobot remains focused on introducing new products into the market and innovating the existing ones. Some of iRobot's recent product innovations include the enhanced version of the Genius Home Intelligence platform, the iRobot H1 handheld vacuum and the Roomba j7+ robot vacuum. Also, the company launched the Roomba Combo i5+, Roomba Combo j5+, Roomba j9+ and Roomba Combo j9+ in September 2023. It also launched two upgrades to the iRobot operating system in 2023.
IRBT is focused on expanding its recurring revenue sources, direct-to-consumer sales channel and business from the online platform. Revenues generated from the online platform to the non-U.S. customers, including Home App, online source of retailers, e-commerce sites and the company’s website, were 51.8% of iRobot’s 2023 revenues. In addition, investments to build brand awareness via campaigning through traditional retail partners on its app and website, and online retailers are likely to significantly boost product demands in the quarters ahead.
However, iRobot’s robot units shipped decreased 27.5% year over year in 2023 due to lower orders from retailers and distributors, primarily driven by a decline in consumer sentiment and increased pricing competition in the market. The company’s revenues declined 24.7% year over year in 2023 due to lower orders. Due to the soft order trend, iRobot expects revenues in the range of $825-$865 million in 2024, indicating a year-over-year decrease of 5.2%.
Increasing promotional activities, suboptimal absorption of fixed operational costs, higher losses related to purchase commitments with the contract manufacturers and excess and obsolete inventory write-downs are affecting the company’s margin performance. In 2023, iRobot recorded an adjusted operating loss of $264.1 million, up 9.9% year over year. The adjusted operating margin was (22.3%) in 2023 versus (14.6%) in the year-ago quarter. The company expects an operating margin of approximately (5%) - (7%) for 2024, with an operating loss in the first half of the year.
In the past year, this Zacks Rank #3 (Hold) company has declined 75.6% compared with the industry’s 1.9% decrease.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Atmus Filtration Technologies Inc. (ATMU - Free Report) presently sports a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 20.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
ATMU’s earnings estimates have increased 2.9% for 2024 in the past 60 days. Shares of Atmus Filtration have risen 20.7% in the past year.
Tetra Tech, Inc. (TTEK - Free Report) currently carries a Zacks Rank #2 (Buy). It delivered a trailing four-quarter average earnings surprise of 14.4%.
In the past 60 days, the Zacks Consensus Estimate for TTEK’s fiscal 2024 earnings has increased 2.9%. The stock has soared 30.9% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) presently has a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 10.4%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.7% in the past 60 days. The stock has gained 35.1% in the past year.