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Here's Why You Should Grab iRobot (IRBT) Stock Right Now

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The U.S. industrial production climbed for the third straight month in August. Drop in joblessness, higher pay packages and expansionary fiscal measures unwrapped by the Republican government are likely to shore up corporate outlay and factory activities in the days ahead. Additionally, upside in last month’s capacity utilization signals further upside in industrial growth, before inflation really kicks in.

Against this encouraging backdrop, investors can bet on selective industrial stocks to fetch alluring returns. The Zacks Industrial Products sector currently occupies the fourth position among the 16 Zacks sectors. It should be noted that our research shows that the top 50% of the Zacks-ranked sectors outperforms the bottom 50% by a factor of more than 2 to 1.

Among the numerous potential gainers in the domain, adding iRobot Corporation IRBT to your portfolio will be a promising investment move at the moment. This stock currently flaunts a Zacks Rank #1 (Strong Buy) and has yielded 42.5% return in the past three months. This performance is way higher that 13.2% growth recorded by the industry.

 

Why to Grab the Stock?

Innovation & Marketing Stance: iRobot has been strengthening its competency on the back of several market investments and research & development moves.

For instance, iRobot’s ongoing marketing programs have been aiding its robotic product sales for quite some time. On the other hand, the 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.

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: Acquisitions of two prime distributors of Europe and Japan in 2017 have been boosting iRobot’s revenues and profitability, of late. 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) is currently providing support to iRobot’s European business.

Top-Line Prospects: iRobot’s revenues jumped 33.8% and 10.4% year over year in 2017 and first-half 2018, respectively. The company believes sturdier demand for its premium home-robotic products, acquisition of two prime distributors of Europe and Japan, as well as diligent market moves will continue to drive its 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 rate will be 21.3% and 15.5% in 2018 and 2019, respectively.

Profitability: iRobot pulled off an impressive average positive earnings surprise of 73.43% over the trailing four quarters. The company 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 rate is pinned at 38.4% and 25.9% in 2018 and 2019, respectively. Notably, the company’s earnings per share are predicted to rise 21% over the next three to five years.

Shareholders’ Payback: iRobot intends to boost its shareholders’ returns through several share-buyback programs. During the June-end 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 same space 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% over the preceding four quarters.

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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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