Why iRobot's Shares Malfunctioned
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 iRobot have fallen over 11% today following an underwhelming earnings report that contained some unexpectedly soft forward guidance.
So what: For the fourth quarter, iRobot reported $100.7 million in revenue, and lost $0.21 per share. The company's top line essentially matched the $100.9 million top-line consensus, and the loss was smaller than the $0.34 loss per share Wall Street was looking for. However, revenue took a 23% drop from the year-ago quarter in spite of 28% growth in home robot sales, which underscores the company's continued reliance on the Pentagon for much of its money.
For the first quarter, iRobot projects revenue in the $98 million to $102 million range, and profits from zero to $0.07 per share. Both estimates come in below the Street's consensus of $110 million on the top line, and $0.06 in EPS. However, full-year guidance looks a bit better, as iRobot expects $480 million to $490 million in 2013 revenue, with between $0.57 and $0.72 per share in earnings. The revenue projection beats the Street's $477.3 million forecast, but falls somewhat below the $0.69 in EPS analysts had expected.
Now what: CEO Colin Angle points out that the Home Robots segment will grow 20% this year to make up 90% of the company's revenue in 2013. That's good news, as ground-based military robots have largely been supplanted by UAVs in the Pentagon's arsenal, particularly as the U.S. continues on its path to pull out of Afghanistan. However, with full-year EPS projected to come in line with the current year's result, despite rising revenue, it appears that iRobot's stock may be in for a flat year as it executes this strategic shift.
Want more news and updates? Add iRobot to your Watchlist now.
The Motley Fool's chief investment officer has selected his number one stock for the next year. Find out which stock it is in our brand-new free report, "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.
The article Why iRobot's Shares Malfunctioned originally appeared on Fool.com.Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights. The Motley Fool recommends iRobot . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.