Investors haven't had many reasons to celebrate iRobot's (IRBT 0.22%) latest operating trends. Demand is high for premium robotic cleaning devices, yet it hasn't been easy to capitalize on that demand in recent months. Tariffs, semiconductor shortages, and supply chain bottlenecks are just a few of the factors that pressured earnings through late 2021.
Yet iRobot's results could start improving as these challenges ease in the second half of 2022. So let's look at some of the good news the company might announce in its upcoming earnings report on May 5.
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Tough start to the year
Sales grew for the full 2021 year but declined in the year's final quarter, dropping a brutal 16% to $455 million. The big question is whether iRobot's management team was right in early February when they blamed the slump mainly on temporary supply chain issues. "The growth runway for robotic floor care remains fundamentally healthy," CEO Colin Angle said at the time.
Semiconductor chip shortages hampered the company's growth, and expectations aren't high for a quick resolution. In fact, most investors who follow the stock are looking for sales to be flat in the first quarter, holding steady at about $300 million. iRobot is also likely to see profitability pressures in the first six months of 2022.
The rebound
There are good reasons to feel optimistic about the second half of 2022, though, and beyond. iRobot could see an immediate easing of tariff pressures, for example, which are set to decline over time anyway as the company shifts more production outside of China.
The management team is focused on securing enough semiconductor components, and if they succeed, this might support faster sales growth going forward. There is plenty of evidence that the brand is strong, after all, including the fact that iRobot accounts for 7 of the top-10 premium robotic vacuum models in the core U.S. market.
Looking ahead
Investors will get a big update on iRobot's rebound potential when management updates its 2022 outlook in a few days. That forecast currently calls for sales and profitability to be weak through the second quarter before rebounding over the next two quarters. Overall, revenue should land between $1.75 billion and $1.85 billion, translating into accelerating growth of between 12% and 18%.
It would be good news if management simply affirms that bullish outlook. However, the stock price might not immediately rebound given that iRobot's rebound likely won't be clearly underway until after its Q2 earnings report in three months.
Investors who believe in the long-term growth story might want to take advantage of all that pessimism baked into the stock price by gaining some exposure to iRobot before the recovery takes clear shape.
