It was a tough year for investors in iRobot (NASDAQ:IRBT), who saw more thrills and downhills than the wildest roller coaster. While the stock gained more than 9% last year, beating the 6% decline for the S&P 500 (SNPINDEX:^GSPC), the looming threat of the continuing trade dispute between the U.S. and China cast a pall over the year.

iRobot lowered its expectations for the year, based largely on the expected impact of 10% tariffs on the company's robotic vacuums. To make matters worse, those same tariffs were going to increase to 25% on Jan. 1 (until the U.S. delayed implementation).

Investors are about to get a better grasp of where things stand, as iRobot is scheduled to release the financial results of its fourth quarter after the market closes on Wednesday, Feb. 6. Let's look at the company's third quarter and some recent developments to see if it provides any insight into what investors can expect when iRobot reports earnings. 

A young girl on a couch, while her father leans over the back, while a robotic vacuum cleans a carpet in the foreground.

Image source: iRobot.

An otherwise impressive quarter

For the third quarter, iRobot reported revenue of $265 million, a 29% year-over-year increase, and diluted earnings per share of $1.12, which marked an even more impressive 47% increase. Both measures easily topped analysts' consensus estimates, which were looking for revenue of $245 million and earnings per share of $0.48. 

Growth in the company's U.S. market was the headliner, up 45% year over year, spurred on by the release of two new models.

There was bad news, however, as iRobot said it expected the tariffs to hit its bottom line revenues to the tune of $5 million in the fourth quarter, something that hadn't been included in previous forecasts.

Current events

There were several recent developments that will be of keen interest to iRobot investors going forward.

First, the sharp increase in tariffs to 25% that was scheduled to go into effect on the first of the year was postponed as part of the ongoing trade negotiations. The U.S. pushed the implementation date out to March 2 to give trade talks more time to resolve into a new deal. 

The second item affecting iRobot shareholders is a long-awaited decision from the International Trade Commission (ITC). On Dec. 4, the ITC issued a final determination that numerous companies had infringed on an iRobot patent, and that the offending products would be barred from being imported into the United States. After the decision was reached, a number of competitors settled with iRobot regarding the licensing of its technology. 

Finally, iRobot announced a collaboration with Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google to integrate robotic and smart home technologies. While this expands an existing partnership between the two, the companies didn't provide many details, so look to see if the company reports any specifics in conjunction with its earnings report.

An illustration of dirt from the Roomba vacuum being evacuated into the base.

The dirt from the Roomba I7 being evacuated into the base. Image source iRobot.

A look ahead

In the wake of iRobot's strong third quarter, the company raised its full-year guidance and is now forecasting revenue in a range of $1.08 billion to $1.09 billion, representing a year-over-year increase of between 22% and 23%. The company is also anticipating earnings per share (EPS) of between $2.55 and $2.75, an increase of between 44% and 55% from the prior-year quarter. It's important to note that last year's results took a one-time hit of $0.41 related to 2017 U.S. tax reform. Adjusting for that one-time charge, the current estimates represent an increase of between 17% and 26% year over year. 

While we don't want to get tripped up by short-term thinking, we can look to Wall Street to provide context regarding the overall sentiment toward the company. Analysts' consensus estimates are calling for revenue of $381.26 million, a 16% year-over-year increase, and earnings per share of $0.50, more than triple the $0.16 from the prior-year quarter, but the $0.41 charge again comes into play. Adjusting for that one-time charge, Q4 17 EPS would have been $0.57, with this year's forecast falling 14% lower -- primarily the result of the $5 million hit related to current-year tariffs.

With all the moving parts -- last year's tax charges, current-year tariffs, and potential settlements related to patent infringement -- there will be a lot to unpack when iRobot reports earnings after the market closes on Feb. 6.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Alphabet (A shares). The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and iRobot. The Motley Fool has a disclosure policy.