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Will Promotion Costs, Tariffs Ail iRobot (IRBT) Q4 Earnings?

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iRobot Corporation (IRBT - Free Report) is scheduled to release fourth-quarter 2019 results on Feb 5, after the market closes.

The company delivered impressive results in the trailing four quarters, beating estimates throughout. The positive surprise was 242.21%, on average. Notably, in the last reported quarter, its earnings of $1.24 per share surpassed the Zacks Consensus Estimate of 54 cents by 129.63%.

In the past three months, shares of this industrial robot maker have decreased 5% against the industry’s growth of 4.2%.



Let us delve deeper.

Key Factors and Estimates

iRobot suffered adverse impacts of tariffs in the third quarter of 2019, a trend that most likely persisted in the fourth quarter as well due to the ongoing China-US trade tiff and implementation of higher tariffs on robotic products.

Additionally, reduced prices of products and high promotional costs are believed to have dented fourth-quarter margins. For the period, the company predicts gross margin to be roughly 40%. Also, earnings per share are anticipated to be 33-53 cents, down from 84 cents recorded in the year-ago quarter.

The Zacks Consensus Estimate for fourth-quarter earnings per share is pegged at 42 cents, indicating a fall of 50% from the year-earlier reported number. Also, the consensus estimate for revenues of $414 million suggests a 7.5% increase from the prior-year reported figure.

Revenue results for the fourth quarter might reflect higher international and U.S. sales.  The company anticipates fourth-quarter revenues within $413-$423 million, suggesting growth of 10% from the year-earlier reported number.

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for iRobot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: iRobot has an Earnings ESP of -1.44% as the Most Accurate Estimate of 41 cents is below the Zacks Consensus Estimate of 42 cents.

iRobot Corporation Price, Consensus and EPS Surprise

iRobot Corporation Price, Consensus and EPS Surprise

iRobot Corporation price-consensus-eps-surprise-chart | iRobot Corporation Quote

Zacks Rank: iRobot carries a Zacks Rank #5 (Strong Sell).

Stocks to Consider

Here are some stocks worth considering in the Zacks Industrial Products sector as our model shows that these have the right combination of elements to beat on earnings.

The Manitowoc Company, Inc. (MTW - Free Report) presently has an Earnings ESP of +32.14% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lindsay Corporation (LNN - Free Report) currently has an Earnings ESP of +8.07% and is Zacks #1 Ranked.

Tennant Company (TNC - Free Report) currently has an Earnings ESP of +4.20% and a Zacks Rank #2.

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