Get Ready for iRobot Corporation (NASDAQ:IRBT) Past, Present, and Future

iRobot Corporation (NASDAQ:IRBT) will report Q3 earnings after the market closes today. Last time around, the company put up its numbers almost exactly at the closing bell. So, you likely won’t have long to wait. The conference call is generally held the following morning.

As with most names this earnings season, the most important part of the equation will likely come from the conference call rather than the initial data. This is because the Q3 period was great. Basically, that will be true across the board. The market isn’t worried about the recent past. It’s worried about the intermediate-term future. So, any indications about expected trends in Q4 and for FY 2019 will likely define the trading narrative for IRBT tomorrow and through the week.

iRobot Corporation (NASDAQ:IRBT) bills itself as a company that designs, builds, and sells robots for the consumer market worldwide.

It offers Roomba floor vacuuming robots; Braava family of automatic floor mopping robots; and Mirra Pool Cleaning Robot to clean residential pools and removes debris as small as two microns from pool floors, walls, and stair.

The company sells its robots through various distribution channels, including chain stores and other national retailers, its online store, and value-added distributors and resellers. iRobot Corporation was founded in 1990 and is headquartered in Bedford, Massachusetts.


What to Watch For

The current consensus estimates for Q3 EPS look for $0.52 (vs $0.76 last year) on revs of $245M, which would represent 19% quarterly y/y top-line growth.

iRobot generally guides up front, and right now, we are expecting FY 2018 guidance with an EPS of $2.30-2.50 on revs of $1.06-1.08B. It will be interesting to see if that is altered this afternoon.

At this point, analysts think the company is sandbagging a bit, with consensus estimates for FY 2018 EPS of $2.63 (vs $1.91 last year) on revs of $1.07 bln (+21% Y/Y). In other words, the company is likely going ratchet up its guidance, but that is already priced in for a few rungs up the ladder, so don’t get overly excited by the first blush “sees” data.

Last time around, the company beat the pants of the number and did not raise guidance.  The stock had been tanking into that July report, so we saw a dramatic one-day gain of about 15-20%, and then an immediate pullback. But pullback buyers were dramatically rewarded: a strategy of buying into the post-earnings dip in IRBT in July yielded almost 50% in returns in just a month.

So, expect a lot of traders to be looking to win the last war in this stock. That means the tape could be crowded with weak handed long interest following the reaction, especially if the company does increase its FY 2018 guidance.

As for the conference call, the issue will likely be about how management talks about increasing competition – of course. This is the 21st-century folks. There will be lots of robot companies. C’mon!

The other key point will about whether or not we get hints on new product launches.

The trading tape has been characterized by a pretty dominant offer, which hasn’t been the type of action IRBT shareholders really want to see. In total, over the past five days, shares of the stock have dropped by roughly -4% on above-average trading volume.

All in all, not a particularly friendly tape, but one that is likely driven by broad market weakness more than anything else, and may ultimately present some new opportunities out of the company’s Q3 data and tone from the conference call.

Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -15%.

iRobot Corporation (NASDAQ:IRBT) generated sales of $226.4M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 4.2% on the top line.

In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($127.3M against $120.7M).

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