Today's Perilous Reversal Stock: IRobot Corporation (IRBT)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified iRobot Corporation ( IRBT) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified iRobot Corporation as such a stock due to the following factors:

  • IRBT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $28.6 million.
  • IRBT has traded 123,993 shares today.
  • IRBT is down 4.1% today.
  • IRBT was up 12.3% yesterday.

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More details on IRBT:

iRobot Corporation designs, develops, and markets robots for the consumer, government, and industrial markets worldwide. It offers consumer products, including floor vacuuming and washing robots, floor sweeping robots, and pool and gutter cleaning robots. IRBT has a PE ratio of 36.6. Currently there are 4 analysts that rate iRobot Corporation a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for iRobot Corporation has been 718,900 shares per day over the past 30 days. iRobot has a market cap of $992.1 million and is part of the consumer goods sector and consumer durables industry. The stock has a beta of 1.82 and a short float of 13.4% with 4.64 days to cover. Shares are down 1.1% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates iRobot Corporation as a buy. 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 the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • 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 ($1.16 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 26.4%. 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 48.98% 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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