Earnings
iRobot Corporation (NASDAQ:IRBT)’s earnings per share increased 950% to $0.21 in the fiscal quarter against $0.02 last year. Revenue increased almost 9% to $106 million. The company raised guidance and investors responded by bidding iRobot Corporation (NASDAQ:IRBT)’s stock up 15% to reward the earnings beat.
The company has zero debt on its balance sheet, has steadily been improving operations, and is now putting its emphasis on its consumer division. Based on the strength of the first quarter, the company raised guidance going forward and now expects full-year earnings between $0.80 and $1.00 per share. In addition to zero debt, the company has $7 in cash per share, giving investors some financial assurance and iRobot greater flexibility to pursue new projects or acquisitions.
One of the weaknesses that iRobot Corporation (NASDAQ:IRBT) has always had is what I consider to be a poor job making the public aware of its various products, and building brand awareness. In addition to the recent positive press regarding the bombings, the company recently made strides in building product awareness, marketing to Patriot fans at the NFL games (IRobot is based out of Boston) and creating a series of short “sitcoms” (watch a 50 second one) about iRobot products cleaning the house of one of New England’s starting linemen, Vince Wilfork.
iRobot Corporation (NASDAQ:IRBT)’s Packbot is also still being used to explore the Fukushima Nuclear reactor, going where humans cannot. During the Louisiana Gulf oil spill, the company provided an underwater robot that was able to validate the underwater plumes, not only generating some press for the company, but proving the value of their robots.
IRobot has received some new competition from military contractor Northrop Grumman Corporation (NYSE:NOC), which is trying to take some of iRobot Corporation (NASDAQ:IRBT)’s defense market share. According to the analysis in The Motley Fool column linked above, at least at present, iRobot shouldn’t lose too much sleep, although Northrop is a much larger company than iRobot, worth in excess of $17.5 billion, while iRobot Corporation (NASDAQ:IRBT)’s market cap sits south of $800 million. The point being, Northrop Grumman Corporation (NYSE:NOC) can afford to throw much more in marketing and lobbyists should it choose to.
The product in question is Northrop Grumman Corporation (NYSE:NOC)’s CUTLASS unmanned ground vehicle (UGV for short.) According to a managing director at the company:
Our CUTLASS vehicle is setting new standards in the UGV market and significantly enhancing the ability of users to handle hazardous threats safely. It is more dexterous, cost effective and, as a package, four times faster than any other UGV. The vehicle is already in service across the U.K. and has proven itself to be robust and capable in the most demanding environments.
Still, at a lighter weight of 30 pounds: “..and while PackBot doesn’t have six individual wheels, navigation certainly hasn’t been an issue; its tank-like treads allow it to easily climb obstacles like stairs, and it can achieve a top speed of 5.8 mph, not significantly slower than the 7.2 mph of the CUTLASS,” the managing director continued.
However, as robotics are a guaranteed growth industry moving forward, I believe all sorts of new competition will be heading its way to grab a piece of the growing pie. And that’s the key word, “growing.” Today, iRobot Roomba’s vacuum our houses, tomorrow we’ll be being picked up by Google Inc (NASDAQ:GOOG)’s “driver-less cars.”
Bottom line
I have been bullish on iRobot for a while now, and believe that the company remains a potential acquisition target for a company like Google, which will no doubt crave the company’s patents and know how. Google Inc (NASDAQ:GOOG) would be able to bring massive amounts of marketing muscle behind iRobot, which I see as one of iRobot’s main weaknesses.
This would be a win for both Google Inc (NASDAQ:GOOG) and iRobot Corporation (NASDAQ:IRBT), and would deliver a large potential return for iRobot shareholders. The acquisition would be a proverbial drop in the bucket for Google as well, as the company has more than $15 billion in cash on its books. The company has been acquiring companies from Zagat to Android (yes, Android was once a separate company), and it’s not random that the division still has this name.
Even if it’s not bought, the future is incredibly bright for robotics in general, and we will see a rapid expansion in the number of bots affecting our everyday lives. With the glowing financial numbers reported, I remain long on iRobot. Though obviously as the stock moves higher the valuation becomes less attractive, I still believe that iRobot remains poised for more growth ahead.
The article iRobot’s Earnings Beat Shows Bright Future originally appeared on Fool.com and is written by Margie Nemcick-Cruz.
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