The company pulled off an impressive average positive earnings surprise of 113.01% over the preceding four quarters. Notably, iRobot's adjusted earnings per share in fourth-quarter 2017 came in at 54 cents per share, beating the Zacks Consensus Estimate of 26 cents.
Let's see how things are shaping up prior to this announcement.
Factors at Play
iRobot believes solid demand for popular home-robotic products, such as Roomba 800, Roomba 900 and Braava jet, will bolster its revenues in the quarters ahead. Moreover, the company's marketing programs and launch of innovative products are anticipated to be conducive to revenue growth. Also, iRobot expects that the Robopolis acquisition (October 2017) will boost its European revenues in the quarters ahead.
The company also expects that improved top-line performance, lower corporate tax and greater operational efficacy will enhance its profitability in the near term.
However, we fear that lingering headwinds in the consumer robotics market might dampen iRobot's near-term prospects.
For instance, excessive business rivalry in the U.S. robotic vacuum-cleaning market might hurt iRobot's revenues in the upcoming quarters.
Furthermore, unfavorable impacts from foreign-exchange translations and extensive dependence on single-source contract manufacturers remain major causes of concern.
Our proven model provides some idea on the stocks that are about to release their earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or at least 3 (Hold) for a likely earnings beat.
You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .
That is not the case here as we will see below.
Zacks ESP: iRobot has an Earnings ESP of -16.67%. This is because the Zacks Consensus Estimate of 53 cents is higher than the Most Accurate estimate of 45 cents per share.
iRobot Corporation Price and EPS Surprise
Zacks Rank: iRobot's favorable Zacks Rank of 3, when combined with a negative Earnings ESP, makes surprise predictions difficult.
It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some stocks that you may want to consider from the Zacks Industrial Products sector , as our model shows that these have the right combination of elements to post an earnings beat:
Alarm.com Holdings, Inc. ALRM , with an Earnings ESP of +5.44% and a Zacks Rank of 1. You can see the complete list of today's Zacks #1 Rank stocks here .
Global Brass and Copper Holdings, Inc. BRSS , with an Earnings ESP of +2.96% and a Zacks Rank of 1.
Caterpillar Inc. CAT , with an Earnings ESP of +4.07% and a Zacks Rank of 2.
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