Why iRobot (IRBT) Stock Is Down Today

NEW YORK (TheStreet) -- IRobot (IRBT) was falling -10.3% to $35.55 Wednesday after missing analysts' expectations for earnings in the first quarter.

For the first quarter the robot maker posted earnings of 18 cents a share, missing analysts' estimates of 19 cents a share by 1 cent. Revenue grew 7.5% to $114.2 million in the quarter. Analysts surveyed by Thomson Reuters expected revenue of $112.26 million.

Looking to the second quarter iRobot expect revenue of $138 million to $145 million and earnings of 15 cents to 25 cents a share, while analysts expect revenue of $143.8 million and earnings of 23 cents a share. The company's full-year guidance calls for revenue of $560 million to $570 million, and earnings of $1 to $1.15 a share. Analysts expect revenue of $562.8 million and earnings of $1.11 a share for the year.

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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 a few notable strengths, 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 27.9%. 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 51.46% 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.
  • You can view the full analysis from the report here: IRBT Ratings Report

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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.

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