Why iRobot Shares Got Crushed

Updated

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of robot specialist iRobot (NAS: IRBT) plummeted 19% today after its fourth-quarter guidance missed Wall Street expectations.

So what: iRobot's third-quarter results easily topped estimates -- EPS of $0.54 on revenue of $126.3 million versus the consensus of $0.34 and $120.4 million -- but downbeat guidance for the current quarter reinforces serious concerns over its growth going forward. Although the company's Home Robot sales remain particularly strong, persistently weak government spending is forcing management to significantly restructure its Defense and Security (D&S) segment.


Now what: Management now sees a fourth-quarter loss of $0.33 to $0.39 -- most of which will be related to the restructuring -- on revenue of $98 million to $102 million, versus the consensus of a $0.20 profit and revenue of $148.8 million. "To right-size the business we have restructured D&S and taken costs out," Chairman and CEO Colin Angle said . "We are taking these actions in order to invest in our high growth Home Robot business as well as our emerging high potential remote presence business, while meeting our commitment to profitable growth." With the stock hitting a new 52-week low today, now might even be an advantageous time to buy into the still-attractive Home Robot segment.

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The article Why iRobot Shares Got Crushed originally appeared on Fool.com.

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