Should You Buy the Dip in iRobot?

NASDAQ: IRBT | iRobot Corporation News, Ratings, and Charts

IRBT – Shares of consumer robot company iRobot (IRBT) have retreated 48% in price over the past year as the company continues to grapple with the semiconductor chip shortage and supply chain bottlenecks. But the company intends to expand its operational capability and diversify its manufacturing footprint in the coming months through innovations and go-to-market plans. So, can the stock recover from its recent price dips? Let’s discuss.

iRobot Corporation (IRBT) in Bedford, Mass., designs, manufactures, and distributes robots and home innovation products. Its iRobot product line includes exclusive technology and innovative concepts in cleaning, mapping, and navigation. It has sold more than 40 million robots worldwide.

However, the company’s shares have retreated 48.5% in price over the past year and 31.7% over the past three months. In addition, closing yesterday’s trading session at $60.61, the stock is currently trading 54.9% below its 52-week high of $134.50, which it hit on March 16, 2021.

In its fourth-quarter earnings release, IRBT reported disappointing financial performance. It highlighted ongoing semiconductor chip constraints and shipping delays that impacted its ability to fulfill more than $35 million in orders. Furthermore, it expects supply chain issues to stymie its performance in the first two quarters of 2022.

Here is what could shape IRBT’s performance in the near term:

Inadequate Financials

IRBT’s revenue has decreased 16.4% year-over-year to $455.45 million for the fourth quarter, ended Jan. 01, 2022. Its operating loss came in at $44.95 million. The company reported a $31.51 million net loss, while its loss per share amounted to $1.17. In addition, its cash and cash equivalents came in at $201.46 million, representing a 53.4% increase for the year ended Jan. 01, 2022.

Weak Profitability

IRBT’s 1.9% trailing-12-months net income margin is 70.4% lower than the 6.6% industry average. Also, its ROC and levered FCF margin are negative 0.08% and 2.5%, respectively. And its trailing-12-month cash from operations stood at a negative $31.97 million, versus the $178.83 million industry average.

POWR Ratings Reflect Uncertainty

IRBT has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. IRBT has an F grade for Growth and a D for Stability. The company’s weak financials and poor profitability are consistent with the Growth grade. In addition, the stock has a 1.19 beta, which is in sync with the Stability grade.

Among 61 stocks in the B-rated Home Improvement & Goods industry, IRBT is ranked #49.

Beyond what I have stated above, one can view IRBT ratings for Value, Quality, Sentiment, and Momentum here.

Bottom Line

While the company has grown its connected customer base by 44% and differentiated its floor care robots through superior software intelligence, it continues to struggle with semiconductor chip shortages and supply chain disruptions. Analysts expect its EPS to decline 397.6% in the current quarter (ending March 2022) and 266.7% in the next quarter (ending June 2022). Furthermore, given the company’s weak profitability and declining revenue, we think the stock is best avoided now.

How Does iRobot Corporation (IRBT) Stack Up Against its Peers?

While IRBT has an overall D rating, one might want to consider its industry peers, Acuity Brands Inc. (AYI), Masonite International Corp. (DOOR), and Duluth Holdings Inc. (DLTH), which have an overall A (Strong Buy) rating.

Want More Great Investing Ideas?

100 Best Stocks for 2022

3 Stocks to DOUBLE This Year

2022 Stock Market Outlook

9 “Must Own” Growth Stocks


IRBT shares were unchanged in premarket trading Friday. Year-to-date, IRBT has declined -8.00%, versus a -7.98% rise in the benchmark S&P 500 index during the same period.


About the Author: Pragya Pandey


Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
IRBTGet RatingGet RatingGet Rating
AYIGet RatingGet RatingGet Rating
DOORGet RatingGet RatingGet Rating
DLTHGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Updated 2024 Stock Market Outlook

The bull market continues to rage on with the S&P 500 (SPY) making new highs. That is the past...the question is what does the future hold? That is why 44 year investment veteran Steve Reitmeister provides this updated 2024 Stock Market Outlook to help you carve a path to outperformance the rest of the year. Read on below for the full story...

3 Energy Stocks Set to Soar Beyond Expectations

Given the geopolitical tensions, increasing global oil demand, and supply adjustments, the energy sector is poised for robust growth. Therefore, investors might consider investing in energy stocks TechnipFMC (FTI), Weatherford International (WFRD), and ChampionX (CHX), which are poised to exceed expectations. Keep reading…

Has Carnival (CCL) Stock Turned Into a Buy After Earnings Release?

Carnival Corporation (CCL) reported record revenue in its most recent quarter but still faces a negative bottom line. The collapse of Francis Scott Key Bridge brings more uncertainty to its financials. Given these events, what stance should one take with CCL stock? Read more to find out…

3 China Stocks Positioned for Long-Term Growth

Despite facing challenges, the Chinese economy has demonstrated resilience, as evidenced by recent robust industrial output and retail sales data. Given this outlook, it might be an opportune time to own three top-notch China stocks, JD.com, Inc. (JD), China Automotive Systems (CAAS), and Youdao, Inc. (DAO). Read on…

Investor Alert: “Buy the Rumor, Sell the News!”

Everyone knows that the Fed is going to cut rates at some point this year. That is the worst kept secret on the planet helping to explain how we keep making new highs for the for the S&P 500 (SPY). Unfortunately that creates an interesting predicament for stocks after rates are cut. Plus another hurdle in the 2024 Presidential election. Steve Reitmeister is here to share his insights on the market outlook along with a preview of his top 12 stocks to outperform. Read on for more...

Read More Stories

More iRobot Corporation (IRBT) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All IRBT News