Founded in 1990, iRobot (NASDAQ:IRBT) became famous for its autonomous home vacuum cleaner and its police robots. More recently, shares of robotics company are up more than 180% in the past five years. 

It could be a sign that a robotics bubble is in the making, caused by media, analysts, and investor hype over some small acquisitions of robotics companies, made by tech giants such as Google (NASDAQ:GOOG) and (NASDAQ:AMZN), which have acquired several robotics companies to get access to patents. 

Not surprisingly, iRobot's high valuation has made some bears -- such as Ben Axler from hedge fund Spruce Point Capital Management -- refer to the company as a bubble. Is iRobot really a bubble?

Source: iRobot.

The bubble argument
Ben Axler has called the company "a troubled consumer product company asking investors to pin its future on speculative grow". Axler estimates the company's intrinsic value to be just $20 to $25 per share, suggesting a huge downside. To Axler, the stock is part of a robotics bubble, which emphasizes the acquisitions of robotics companies by leading tech companies. 

For example, the acquisition of Boston Dynamics (well-known for developing a 29 mile-per-hour Cheetah robot) by Google in 2013 was perceived as a clear sign of the increasing importance of robotics.

Although Google's plans for Boston Dynamics may not be consumer-focused, the search giant appears to be well-aware of the importance that automation will play in the future, and may have acquired Boston Dynamics for its patents. 

In a similar fashion, paid more than $700 millions for Kiva Systems in 2012. The move allowed Amazon to use Kiva robots in its shipping centers.

Where are the profits?
A close look at robotics companies reveals poor fundamentals. In the case of iRobot, it generated net income of only $5.3 million in the first quarter of 2014, down from $8.4 million during the same quarter a year ago. The decrease in earnings was mainly due to declining sales in defense robots.

Moreover, Axler goes as far to say that iRobot also appears to be using aggressive accounting techniques to hide its increasing inventory. And to convince investors that its future is still bright, the company should have accelerated its investor marketing campaigns. 

Promising U.S. real estate market exposure
It is important to look at both sides of the story. When looking at iRobot, bears tend to focus on the company's weak profitability and declining sales. However, looking at fundamentals is perhaps not the best way to understand a company such as iRobot, which is considered a growth investment, rather than a value stock. 

Can iRobot grow meaningfully enough to justify its current market cap? Recent revenue figures suggest iRobot's growth potential may be limited. However, it is important to understand the context behind those numbers. iRobot is currently changing its product mix to become less exposed to cuts in military budgets.

The new business model appears to give more importance to home robots, while relying less on defense robots. In the long run, this shift looks promising, as iRobot could benefit from a recovery in the real estate market.

In 2013, the number of homeowners under 35 increased for the first time in more than five years, according to the U.S. Census Bureau. This is great news for iRobot, as young owners are potential customers because they tend to be more tech savvy.

Finally, iRobot could eventually start mass-production of robots oriented to other promising segments, such as health care or manufacturing. Note that the company recently introduced RP-VITA, which allows a physician to remotely take command of a clinical environment without the need for any onsite setup or assistance from nurses.

Final Foolish takeaway
The robotics industry is still in an early stage. Therefore, it is very difficult to defend either a bullish or bearish thesis on iRobot. Both sides of the story should be carefully analyzed. More importantly, when looking at robotics companies, both fundamentals and growth prospects should be properly assessed.

In the case of iRobot, the company recently experienced a meaningful decrease in revenue, mainly due to declining sales for defense robots. However, it is also important to consider that iRobot is currently changing its product mix. The company's increasing U.S. real estate market exposure, combined with its market opportunity in the health care space, make it an interesting watch.