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Why iRobot (IRBT) Stock Is Gaining After Hours

NEW YORK (TheStreet) -- Shares of iRobot Corp (IRBT) are climbing in extended trading after announcing a $50 million buyback.

After the bell, the stock had climbed 2.4% to $43.84.

The Roomba manufacturer said its board had authorized the repurchase program whereby the company will buy up to $50 million of common stock between May 1, 2014 and April 30, 2015.

"The board's authorization of a share repurchase program reflects our confidence in the health and long-term outlook of the company," said CEO Colin Angle in a statement.

"With a strong balance sheet and cash flows, we believe we can take advantage of volatile market conditions to buy back our shares while maintaining the flexibility to make strategic investments in our future," he added.

Must Read: Warren Buffett's 10 Favorite Growth Stocks

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TheStreet Ratings team rates IROBOT CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate IROBOT CORP (IRBT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • IROBOT CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, IROBOT CORP increased its bottom line by earning $0.94 versus $0.61 in the prior year. This year, the market expects an improvement in earnings ($1.13 versus $0.94).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 153.7% when compared to the same quarter one year prior, rising from -$5.94 million to $3.19 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 28.2%. Since the same quarter one year prior, revenues rose by 25.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • IRBT has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.81, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 152.38% and other important driving factors, this stock has surged by 59.11% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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