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Why iRobot (IRBT) is a Must-Add Stock to Your Portfolio?


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Strength in business and consumer spending, along with growth in exports, has been driving U.S. economic growth, of late. Going forward, the robust economic momentum is anticipated to spur infrastructure spending across the country. Against this backdrop, inventing in selective industrial stocks seems sensible now.

Among the numerous potential gainers in the Industrial Products sector , adding iRobot CorporationIRBT to your portfolio will be a promising investment move at the moment. This stock currently flaunts a Zacks Rank #1 (Strong Buy).

Why to Grab the Stock?

Robust Top-Line Prospects: iRobot's revenues grew 33.8% and 10.4% year over year in 2017 and first-half 2018, respectively. The company's second-quarter top-line performance outpaced the Zacks Consensus Estimate by 2.3% and also came in 23.6% higher than the year-ago tally. This stellar performance was backed by solid sales secured from all end-markets. iRobot believes sturdier demand for its premium home-robotic products will continue to drive the company's revenues in the quarters ahead. The company currently anticipates generating revenues of $1.06-$1.08 billion in 2018, reflecting year-over-year growth of 20-22%.

Per our estimates, iRobot's year-over-year revenue growth will be 21.3% and 15.5% in 2018 and 2019, respectively.

Over the past month, iRobot's shares have rallied 14.2%, outperforming 1.5% growth recorded by the industry .

Profitability: iRobot pulled off an impressive average positive earnings surprise of 73.43% over the last four quarters. The company's earnings surpassed the Zacks Consensus Estimate by a massive 117.6% and also came in 37% higher than the year-ago tally in the June-end quarter. iRobot expects that stronger revenues, operational excellence, diligent cost-saving moves and reduced corporate tax rates will be conducive to its bottom-line performance, moving ahead. Notably, the company estimates to generate earnings of $2.30-$2.50 per share in 2018, higher than the previous view of $2.15-$2.40 per share.

Per our estimates, iRobot's year-over-year earnings growth will be 36.7% and 27.4% in 2018 and 2019, respectively. Notably, the company's earnings per share are predicted to rise 19.5% over the next three to five years.

Investment Track: iRobot is poised to bolster its revenues and profitability on the back of several innovation and marketing investments. For instance, launch of Roomba 690 and 890 in 2017 broadened cloud connectivity to a wider range of iRobot's customers.

Going forward, the company intends to introduce advanced mobile-app and connectivity enabled products. On the other hand, iRobot's marketing programs have been aiding its Roomba and Braava product sales. Also, this July, the company announced an increase to its existing revolving credit facility from $90 million to $150 million, and extended its term to 2023, in order to secure additional financial flexibility for future marketing and product-innovation programs.

Acquisition Story: iRobot also tries to enhance its competency on the back of strategic business acquisitions. In 2017, the company acquired two of its prime distributors in Europe and Japan in a bid to fortify its global business footprint. The buyout of Sales On Demand Corporation (April 2017) has been driving iRobot's sales in Japan. Meanwhile, the acquisition of Robopolis SAS (October 2017) has been providing support to iRobot's European business, of late.

Shareholders' Payback: iRobot intends to boost its shareholders' returns through several share-buyback programs. During the second quarter, the company completed its last $50-million share-buyback program (authorized in February 2018). In sync with this, iRobot repurchased 800,000 shares at an average price of $62.57 per share.

Other Key Picks

Some other top-ranked stocks in the sector are listed below:

Altra Industrial Motion Corp. AIMC sports a Zacks Rank of 1. The company pulled off an average positive earnings surprise of 4.01% over the trailing four quarters. You can see the complete list of today's Zacks #1 Rank stocks here .

Advanced Emissions Solutions, Inc. ADES carries a Zacks Rank of 2 (Buy). The company delivered an average positive earnings surprise of 16.40% over the preceding four quarters.

Alamo Group, Inc. ALG also holds a Zacks Rank #2. The stock came up with an average positive earnings surprise of 6.06% during the same time frame.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>


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iRobot Corporation (IRBT): Free Stock Analysis Report

Alamo Group, Inc. (ALG): Free Stock Analysis Report

Altra Industrial Motion Corp. (AIMC): Free Stock Analysis Report

Advanced Emissions Solutions, Inc. (ADES): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Business , Stocks
Referenced Symbols: IRBT , ALG , AIMC , ADES




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