All things robotics were red-hot in 2013, in large part because tech titans Google (NASDAQ:GOOGL) and (NASDAQ:AMZN) were busy gobbling up robotics companies. Shares of iRobot(NASDAQ:IRBT), one of the very few pure robotics plays, towed the android line, as they soared 85% in 2013. (They've gained 8% in 2014 thanks to a 7% spike on Tuesday and 4% rise on Wednesday, because of the company's launch of a new-generation Scooba floor scrubber on the eve of the Consumer Electronics Show.)  

Let's look at the reasons behind the stock price action of this robot maker best known for its Roomba vacuuming robot -- though it also makes other cleaning bots for consumers, as well as robots for defense and commercial applications -- and what investors should home in on in 2014.

The nuts and bolts beneath the 2013 financial results
iRobot posted decent, yet far from stellar, financial results in 2013. Revenue and earnings per share increased 7.6% and 2%, respectively, for the first nine months of 2013 (fourth-quarter results are slated to be released on Feb. 5).

You'd be right to wonder whether I needed a shot of artificial intelligence calling those results "decent." However, if we look beneath those two weak headliner numbers, we'll see some solid nuts and bolts.

While EPS were up a tepid 2%, operating income rose 22%. Operating income is a better gauge of how a company's core business is performing than is net income or, assuming no notable share dilution issues, EPS. 

iRobot's sales are essentially generated from two segments: home, and defense and security. Through the first nine months of 2013, its home, or consumer, business accounted for 88.5% of its $361.1 million revenue, with defense kicking in 9.3%. The remaining 2.3% came from miscellaneous other. 

Revenue in the consumer business -- which makes vacuuming, floor scrubbing and mopping, gutter cleaning, and pool cleaning bots -- grew 16.7% to $319.6 million, through the first nine months of 2013. Considering the U.S. economy has only recently begun its recovery and much of the world, notably Europe, still hasn't emerged from the recession, this is good growth for a discretionary product line priced mostly in the $300-$700 range. 

The U.S. government shutdown last year hampered iRobot's defense business results. Additionally, government budget cuts have negatively affected results over the last few years. Defense revenue decreased 39% to $33.7 million for the first nine months of 2013, which dragged down the company's overall results. The good news is that the company believes revenue in this business has bottomed out. 

iRobot is in the early stages of developing and marketing its commercial products -- remote presence, or "telepresence," and videoconferencing assistance bots -- primarily targeted to the health-care industry. This business didn't contribute meaningfully to revenue in 2013, nor is it expected to do so in 2014. 

A rising tide – thanks largely to Google and Amazon – lifts all... robots
The lion's share to the entire 85% rise in the stock price in 2013 was due to investors who bid up the valuation of the stock. The price-to-earnings ratio for the trailing-12-month period, arguably the most common valuation measure, rose 82% during 2013 -- almost exactly the same as the rise in the stock price. 

IRBT PE Ratio (TTM) Chart

Data by YCharts

Robotics was a hot space throughout 2013, and entered red-hot territory late in the year as tech behemoths Amazon and Google were busy "robotic-ing" it up, starting in 2012 and hitting fever pitch in late 2013.

In 2012, Amazon acquired Kiva Systems, which makes robots that the e-tailing giant is now using for order fulfillment. Kiva's bots are helping Amazon improve efficiency and cut cost. More recently, Amazon made headlines late last year when it announced plans to use drones for delivery of packages of up to 5 pounds. The Federal Aviation Administration doesn't yet have rules pertaining to drones, so the earliest Amazon's delivery bots could hit the skies would be 2015. 

Google snapped up eight robotics companies in 2013, with a big-name buy in mid-December -- Boston Dynamics, which makes the Atlas robot, one of the most advanced humanoid robots. The company also produces several ultra-fast animal-like bots, including the Cheetah, which can reach speeds of 28.3 mph. Google hasn't said much about its plans for its growing army of robots, though there's buzz that it intends to use them in its delivery service.

iRobot received a pair of analysts' upgrades in mid-December on the back of Google's big buy. The Raymond James analyst who delivered an early Christmas present to shareholders in the form of a "strong buy" recommendation cited his main reasons as the company's expansion into other countries, most notably China, and new product lines, such as the Braava mopping bot. iRobot relaunched the Mint robot, which it acquired via its 2012 acquisition of Evolution Robotics, as Braava in mid-2013, and is currently expanding distribution of the product.

What investors should key in on in 2014

1. More detailed 2014 guidance 

The company provided little information during its third-quarter conference call regarding 2014 guidance, other than its overall "preliminary" revenue growth forecast in the mid-to-high-teens. Investors should expect more detail when iRobot releases its fourth-quarter results on Feb. 5, and home in on the earnings and margins forecasts. Operating and profit margins, for the trailing-12-month period, are 7.4% and 5.6%, respectively. We want to see guidance for margins to at least remain stable.

2. New product sales 

In addition to the Braava, previously discussed, iRobot recently launched two other new products. It launched its next-generation Roomba vacuuming bot in the fourth quarter, and released news of its new-gen Scooba floor scrubber launch on Monday night, the eve of the CES. Investors should monitor sales data for these new products over the next few quarters.

3. The defense business' revenue and margins

This business generated revenue of $33.7 million in the first nine months of 2013, and is expected to hit the $50 million mark for 2013 when the company releases its fourth-quarter and full-year 2013 results. A notable miss or beat would be meaningful. 

4. Progress in its commercial business 

This business, which is only expected to contribute about 3% to revenue in 2014, before it makes a "more meaningful" contribution in 2015 and beyond, has significant long-term potential, in my opinion, if the company develops high enough a moat to keep competitors at bay.   

The Foolish bottom line
I'm cautiously optimistic about iRobot as a long-term play. The stock is pricey for a relatively slow grower, as it trades at 31.7 times forward earnings. Positively, the company has a first-mover advantage in the consumer robotics market, and is in the early stages of developing what could be a potentially lucrative commercial business. My main concern is the company's moat, as it needs to remain high enough to keep competitors at bay, as margins aren't fat enough to allow for heavy price competition. Investors need to monitor the competitive landscape, which is heating up in the robotics space.