We issued an updated research report on the premium appliances company iRobot Corporation IRBT on Mar 24, 2016. The company designs, sells mechanized robots worldwide for performing defensive, household and security-related activities. iRobot has expanded significantly since its inception in 1990; however, it is currently facing certain headwinds.
Ongoing Issues
iRobot earns a major proportion of its revenues from its home robotics business. However, the business’ success depends significantly on the company’s ability to penetrate the consumer home-care market. Inability to introduce home robotics products or deliver the same within the said time might considerably hurt the company’s top line.
Moreover, iRobot widens its business through business internationalization which exposes it to several headwinds. For instance, a strong U.S. dollar has been eroding value of the company's international revenues and margins to some extent in the recent times. Also, intense competition exposes the company to risks of market share loss. Failure to maintain business competency can weigh on the company’s sales in near future.
Scope for Growth
We anticipate the abovementioned negatives to continue to weigh on this Zacks Rank #4 (Sell) stock’s top and bottom line. Nevertheless, certain initiatives undertaken by the company might partially offset the negatives. Greater liquidity from iRobot’s divestiture of the Defense & Security division would boost revenues and margins over the long term. Also, the company’s market penetration and development strategies are expected to support top- and bottom-line growth.
Stocks to Consider
Some better-ranked stocks within the industry are A-Mark Precious Metals, Inc. AMRK, Black Diamond, Inc. BDE and Coach, Inc. COH. All the three companies currently hold a Zacks Rank #2 (Buy).
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