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iRobot (IRBT) Up 16.3% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for iRobot Corporation (IRBT - Free Report) . Shares have added about 16.3% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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 catalysts.

Second-Quarter 2017 Results

iRobot Corporation reported better-than-expected results for second-quarter 2017.

Quarterly adjusted earnings came in at $0.27 per share, as against the Zacks Consensus Estimate of a loss of $0.25 per share. The bottom line also came in higher than the year-ago quarter tally of $0.17 per share.

Revenues: Quarterly revenues came in at $183.1 million, comfortably surpassing the Zacks Consensus Estimate of $176 million. In addition, the top line came 23.2% higher than the prior-year quarter figure.

Revenue in Details

In second-quarter 2017, the company’s Consumer business generated revenues worth $183.1 million, up 23.7% year over year. This upswing was stemmed by robust sales of the company’s home robotic products across all (especially Roomba 652) major end markets.

Total units shipped in the quarter came in at 749,000, up from 674,000 shipped in second-quarter 2016.

Margins/Costs: Cost of sales in the reported quarter was $93.3 million, up 18% year over year. Gross profit margin in the reported quarter came in at 49.1%, expanding 230 basis points (bps) year over year.

Total operating expenses were $85.8 million, up 34.5% year over year.

Operating margin came in at 2.2% compared with 3.9% recorded in the year-ago period.

Balance Sheet/Cash Flow: iRobot exited the quarter under review with cash and cash equivalents of $220.2 million, up from $214.5 million recorded in Dec 31, 2016. Long-term liabilities were $6.3 million, nearly flat with the figure recorded at the end of 2016.

At the end of the second quarter, iRobot generated net cash of $32.8 million from operating activities as against $35.6 million generated in the year-earlier period. Capital expenditure was $13.3 million on Jul 1, 2017, compared to $4.9 million recorded at the end of second-quarter 2016.

Outlook: iRobot raised its revenue guidance for full-year 2017 from $780–$790 million to $815-$825 million (estimating a year-over-year increment of 24–26%). Furthermore, the company lifted its full-year earnings guidance from $1.45–$1.70 per share to the $1.80-$2.00 per share range. However, the company noted that the revised guidance does not include the impact of its planned Robopolis acquisition, which is likely to close by fourth-quarter 2017. Notably, iRobot mentioned that it plans to fund several new product innovation projects with the incremental profitability.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

iRobot Corporation Price and Consensus

 

iRobot Corporation Price and Consensus | iRobot Corporation Quote

VGM Scores

At this time, iRobot's stock has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth 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.

The company's stock is suitable for growth and momentum based on our styles scores.

Outlook

The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.




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