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iRobot Corp (IRBT) Poised to Grow on Solid Growth Drivers

On Jan 2, iRobot Corporation IRBT was upgraded to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold). Going by the Zacks model, companies carrying a Zacks Rank #2 have chances of performing better than the broader market over the next two to three months.

Why the Upgrade?

Over the last month, iRobot’s shares yielded a return of 24%, outperforming 3.4% growth recorded by the industry.

Notably, the stock currently carries an attractive VGM Score of B.

In October 2017, iRobot raised its revenue guidance for full-year 2017 (results not yet released) from the $815-$825 million range to $870-$880 million (estimating a year-over-year increment of 33-34%). The company expects that robust sales of popular home robotic products (Roomba 800) and the ongoing marketing programs will bolster its revenues in all end markets across the United States, and the Europe, the Middle East and Africa (EMEA) region.

The company also intends to reinforce its business on the back of strategic inorganic growth programs. In October 2017, it successfully acquired its largest European distributor — Robopolis. The deal is sync with iRobot’s strategy to gain greater direct control over go-to-market execution in the overseas end markets. Notably, the company believes that it would be able to serve the demands of the European end users more efficiently on the back of the Robopolis buyout.

We also notice that iRobot constantly tries to enhance its product portfolio and boost aggregate sales on the back of innovation investments. For instance, the wi-fi enabled Roomba 890 and 690 robots (launched in May 2017) are expected to secure sturdy market response in all markets across the United States, Europe, China and the EMEA region. In addition, the company intends to equip consumers with more state-of-the-art home robotic products.

The company also believes its commercial success is largely dependent on the hold of its proprietary technology as well as capability of employees to continue with further innovation. In sync with this, iRobots has entered into agreements with Stanley Black & Decker, Inc. SWK (in December 2017) and Micro-Star International Co., Ltd. (in September 2017) to manage matters related to patent dispute. Per these deals, iRobot ensured that both Micro-Star International and Stanley Black & Decker will soon exit the global robotic cleaning industry.

Moreover, the stock’s projected earnings per share growth for 2018 is currently pegged at 47.6%, higher than 20.2% growth estimated to be recorded by the industry.

Other Stocks to Consider

Two other top-ranked stocks in the same space are listed below:

Avery Dennison Corporation AVY currently carries a Zacks Rank #2. The company has pulled off an average positive earnings surprise of 6.85% for the last four quarters. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Caterpillar, Inc. CAT also holds a Zacks Rank #2. The company has recorded an average positive earnings surprise of 53.06% over the trailing four quarters.

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iRobot Corporation (IRBT): Free Stock Analysis Report
 
Stanley Black & Decker, Inc. (SWK): Free Stock Analysis Report
 
Caterpillar, Inc. (CAT): Free Stock Analysis Report
 
Avery Dennison Corporation (AVY): Free Stock Analysis Report
 
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