On Feb 25, 2015, we issued an updated research report on the premium appliances company, iRobot Corporation (IRBT). The company designs, develops and sells mechanized robots worldwide for performing defensive, household and security-related activities.
Since its inception in 1990, iRobot has remarkably expanded its business on a global scale, through both national retailers and specialized chain stores. However, amid the progress, the company’s business is still exposed to certain internal and external headwinds.
Scopes for Improvement
iRobot reported impressive financial results for fourth-quarter 2014, with year-over-year growth in both earnings and revenues. Booming demand in the Home Robots and Defense & Security segments primarily drove the top and bottom-line growth in the quarter.
Going forward, iRobot expects to generate greater revenues on the back of strategic marketing programs. The company also remains committed to enhancing its brand value as well as stakeholders’ wealth through efficient capital deployment programs.
Problems to Consider
The company constantly tries to expand or maintain its market share within the extensively competitive consumer goods sector. As a result, it incurs heavy innovation expenses, which remain a drag on iRobot's margins. Further, implementation of non-expansionary fiscal policies by the U.S. federal authorities can significantly hurt the Defense and Security segment revenues. Also, the company’s international operations face currency-devaluation headwinds.
With a market capitalization of $961.08 million, iRobot currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Audience, Inc. (ADNC), Boyd Gaming Corp. (BYD) and Churchill Downs Inc. (CHDN). All the three stocks hold a Zacks Rank #2 (Buy).
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