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Can Solid Product Demand Aid iRobot (IRBT) in Q2 Earnings?

Zacks Equity Research

iRobot Corporation IRBT is scheduled to release second-quarter 2019 results on Jul 23, after the market closes.

The company delivered impressive results in the last four quarters, beating estimates on all occasions. Average earnings surprise was a positive 94.52%. Notably, in the last reported quarter, its earnings of 96 cents per share surpassed the Zacks Consensus Estimate of 68 cents by 41.18%.

In the past three months, shares of this industrial robot maker have decreased 28.8% compared with the industry’s decline of 17%.



Let us see how things are shaping up for iRobot this quarter.

Factors to Affect Q2 Results

We believe that rising use of robotic technologies for vacuuming, mopping and mowing across the globe has created solid growth opportunities for iRobot. Apart from this industry tailwind, the company’s solid product offerings — including Roomba Vacuums, Braava Mops and Terra Mows — should have positively influenced its top-line results in the second quarter.

Also, the company’s zeal to innovative products is added advantage for top-line growth. In the second quarter, it unveiled two robots — Roomba s9+ robot vacuum and Braava jet m6 robot mop. Roomba s9+ robot vacuum is equipped with PerfectEdge, iAdapt Navigation with Imprint Smart Mapping and Clean Base Automatic Dirt Disposal technologies, whereas, Braava jet m6 robot mop has Imprint Smart Mapping and iAdapt Navigation with vSLAM technologies.

In addition to these, gradually rising demand for iRobot’s products internationally, especially in Japan, EMEA and other regions, and effective marketing efforts will be boons. The company is also working diligently to expand its manufacturing capabilities outside China.

For the second quarter of 2019, it predicts sales to grow in high teens on the back of solid demand for products — Roomba i7/i7+ and those launched in the quarter.

However, the company believes that investments on diversification of supply chain, increased promotional activities and impacts related to product launches in the second quarter will impact its gross margin, with the second and third quarters likely to witness the lowest mark in 2019.

Also, imposition of tariffs by the United States on import of a wide array of products led to trade disputes with China. These tariff-related issues should have adversely impacted second-quarter results (negative impact of $20-$25 million is expected in 2019).

Earnings Whispers

Our proven model provides some idea about the stocks that are about to release their earnings results. Per the model, a stock needs a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 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.

The case with iRobot has been provided below.

Earnings ESP: iRobot has an Earnings ESP of 0.00% as both the Zacks Consensus Estimate and the Most Accurate Estimate are pegged at 3 cents.

iRobot Corporation Price, Consensus and EPS Surprise

 

iRobot Corporation Price, Consensus and EPS Surprise

iRobot Corporation price-consensus-eps-surprise-chart | iRobot Corporation Quote

Zacks Rank: The company currently carries a Zacks Rank #3.

Note 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 a negative estimate revisions momentum.

Stocks to Consider

Here are some companies in the Zacks Industrial Products sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter, according to our model.

John Bean Technologies, Inc. JBT presently has an Earnings ESP of +2.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chart Industries, Inc. GTLS has an Earnings ESP of +3.28% and a Zacks Rank #2 at present.

Axon Enterprise, Inc. AAXN currently has an Earnings ESP of +10.96% and a Zacks Rank #3.

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