Personal Finance

Why iRobot Stock Lost 23.4% in February

An iRobot Braava mopping bot cleaning a hardwood floor with a dog walking in the background.

What happened

iRobot (NASDAQ: IRBT) stock lost 23.4% in February, according to data provided by S&P Global Market Intelligence . Disappointing fiscal-year guidance appears to have been the biggest impetus for the sell-offs.

So what

iRobot reported fourth-quarter earnings results and issued guidance for the current fiscal year on Feb. 7. Sales for the period climbed 53.8% year over year to reach $326.9 million, and earnings per share (EPS) came in at $0.16 (down from $0.49 in the fourth quarter of 2016) despite a $0.41-per-share impairment charge related to the new tax law. Sales and earnings for the period came in substantially above the average analyst estimates, but the company's guidance for EPS between $2.10 and $2.35 in 2018 fell short of Wall Street's expectations of $2.70 per share for the fiscal year.

An iRobot Braava mopping bot cleaning a hardwood floor with a dog walking in the background.

Image source: iRobot.

Shares plunged 32% the day of the earnings report and conference call. They have since somewhat rebounded, but are still down more than 20% following the tepid guidance.

Now what

With north of 60% market share in robotic vacuum cleaners, iRobot is a leader in the home robotics space. That's a product category that's on track to see substantial growth over the long term. The company also has growth opportunities in floor-mopping robot and other categories, but will need to contend with an influx of competitors.

iRobot is ramping up its marketing and product development initiatives in order to take advantage of its market position and fend off rivals -- a move that explains why earnings guidance fell short of the market's expectations despite projected sales being higher than estimated. It's also worth keeping in mind that the company has typically been conservative with its earnings guidance.

10 stocks we like better than Walmart

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, the Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of March 5, 2018

The author(s) may have a position in any stocks mentioned.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends iRobot. The Motley Fool has a disclosure policy .

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


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

In This Story

IRBT EPS

Other Topics

Stocks

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More