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 technologist iRobot (NASDAQ:IRBT) sank 10% on Wednesday after its quarterly results and outlook disappointed Wall Street.
So what: iRobot's second-quarter earnings per share of $0.29 edged estimates, but a wide miss on the top line -- $139.80 million versus the consensus of $142.51 million -- coupled with downbeat revenue guidance is reigniting analysts' concerns over slowing growth. In fact, iRobot's gross margin fell 290 basis points year over year to 44.4%, suggesting that its competitive position is becoming more expensive to maintain.
Now what: Management now sees third-quarter EPS of $0.32-$0.35 on revenue of $133 million-$136 million, below the consensus of $0.36 and $149.54 million, respectively. "Our Home Robot business continues to deliver strong growth on an ever-increasing base in all three geographic regions while our Defense & Security business built a substantial order backlog for delivery in the second half of 2014," Chairman and CEO Colin Angle reassured investors in a press release. "Further, strong backlog growth during the quarter in Defense & Security, coupled with several expected near-term orders, and the overall growth of high probability pipeline has significantly improved visibility for 2014." With iRobot shares now off more than 25% from their 52-week high and trading at a PEG of 1, it might be an advantageous time to buy into that bull talk.
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Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Baidu, Chipotle Mexican Grill, and iRobot. The Motley Fool owns shares of Baidu and Chipotle Mexican Grill. 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.