What happened

Shares of iRobot (IRBT -2.03%) were off 13% through 11:04 a.m. EDT today -- a curious reaction indeed to the astounding earnings beat that the company turned in last night.  

Analysts had forecast that iRobot would earn a mere $0.09 per share in profit on sales of just $264 million for its fiscal first quarter 2021, but when iRobot released its results, it reported more than four times as much profit -- $0.41 per share, pro forma -- and quarterly sales of $303.3 million.  

Cartoon characters confused by stock chart arrow falling and crashing into floor

Image source: Getty Images.

So what

First-quarter sales grew 58% year over year, an astounding number given that the first quarter of 2020 was the quarter in which the coronavirus was just taking hold in America. Lockdowns were just taking effect -- locking homeowners into their homes, locking their cleaning services out, and presumably raising interest in automated home-cleaning solutions like iRobot's Roomba robot vacuums. And yet, a year later, with much of the country opened back up, iRobot sold way more robots in this quarter than in that quarter. GAAP earnings for the quarter were $0.26 per share, reversing last year's first-quarter loss of $0.64.

Commenting on the results, CEO Colin Angle said that "consumer demand for our products has remained resilient." And in light of that, Angle says iRobot has "increased our expectations for 2021 revenue to reflect our first-quarter performance and solid growth prospects over the coming quarters ... [and] reaffirmed our 2021 operating income and EPS" as well.

Now what

Management now forecasts that it will close out 2021 will sales of nearly $1.7 billion, operating profit of at least $69 million (and perhaps as much as $79 million), and GAAP earnings per share ranging from $1.85 to $2.10.

So why is the stock down today? You can't blame the revenue forecast: It's higher than the $1.65 billion in annual sales that Wall Street is looking for. The problem is that iRobot's earnings projection looks conservative. Cast in pro forma terms, management says 2021 earnings will be only $3 to $3.25 per share, and at the midpoint of that range, iRobot appears likely to fall short of consensus projections for $3.22 per share in pro forma profit.  

Given that all the other news out of iRobot yesterday was so good, this is the only reason I see for iRobot stock to crash today.