Tonight, we're getting a read on consumer and army robot maker iRobot (NASDAQ:IRBT), and my tea leaves say that the holiday quarter should look good. Why? Read on.
What analysts say:
- Buy, sell, or waffle? Seven analysts follow this company today. Six of them are buying, and the seventh settles for "hold." In our Motley Fool CAPS database, the Rule Breakers recommendation is a three-star stock, with nearly 700 user ratings to its name.
- Revenues. iRobot should have sold about $62 million worth of household helpers and army accessories over the past quarter, up from $37.5 million a year earlier. That forecast falls squarely inside management's guidance of $54 million to $64 million.
- Earnings. The company just about broke even in its first quarter on the public markets one year ago. This time, analysts are expecting an $0.08 loss per share.
What management says:
In an exclusive interview for our Rule Breakers newsletter, CEO Colin Angle explained that he sees his company as the equivalent of both IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT) in the early days of the personal computer -- only without any meaningful competition in the robotic world. And that should pay dividends down the road: "Ten years from now, I believe that iRobot will still be making complete robots, but a large part of our business will have grown up around licensing our technology to other robot designers."
Read the rest of the interview with a free 30-day trial subscription. It might just be the best $0 you ever spent.
What management does:
There's not a lot of operating history here on which to fall back. The company just went public in November 2005, so some of these trailing numbers include pre-IPO reports. However, it's clear that iRobot isn't making a mint off its robots quite yet. Revenue growth is bumpy, bottom-line margins are thin (though they're improving), and cash flow isn't always positive.
You gotta start somewhere, though, and the gross margins are expanding to give management some breathing room.
|
12/2005 |
4/2006 |
7/2006 |
9/2006 | |
|---|---|---|---|---|
|
Gross |
33.6% |
34.2% |
35.7% |
36.6% |
|
Operating |
1.8% |
2.0% |
2.4% |
2.4% |
|
Net |
1.8% |
2.3% |
3.0% |
3.1% |
|
FCF/Revenue |
(2.4%) |
5.9% |
1.1% |
1.5% |
|
Y-O-Y Growth |
12/2005 |
4/2006 |
7/2006 |
9/2006 |
|---|---|---|---|---|
|
Revenue |
49.4% |
66.6% |
56.9% |
31.1% |
One Fool says:
OK, so I'm hooked on iRobot's technology. There's something irresistibly geeky about automatic floor cleaners straight out of The Jetsons, not to mention half-ton unmanned military pack mules and tiny minesweeper bots. But here's the true test of the company's mass appeal. I gave my Luddite wife a Roomba for Christmas, and two days later, it had earned the nickname "My Little Helper." High-tech or not, the thing just works, and the kids love to watch it creeping under the bed or across the living room floor, sweeping some areas we just can't reach without redecorating entirely.
The military contracts keep rolling in, and iRobot keeps rolling out new battlefield models, too. In the home, there's now the Roomba vacuum, the Scooba mopper-upper, and the Dirt Dog for nasty garage floors and the like. Somebody figured out how to turn an Apple (NASDAQ:AAPL) MacBook into a Roomba remote control, and the company actively supports the enthusiast community with software updates and well-documented internals. That open mindset is a testament to management's vision of iRobot, the software licensing company, in the next decade.
So, then, the next question is: How many other overworked housewives got a little helper for the holidays? Judging by how many local stores I had to visit before finding an actual robot on the shelf, this wannabe Peter Lynch says there was plenty of that holiday spirit around.
Competitors:
- Lockheed Martin (NYSE:LMT)
- Toyota Motor (NYSE:TM)
- General Dynamics (NYSE:GD)
iRobot is a Rule Breakers recommendation. You can find out why with a 30-day free trial. Microsoft is a Motley Fool Inside Value pick.
Fool contributor Anders Bylund holds no position in any of the companies discussed here -- just plenty of their products. You can check out Anders' holdings if you like, and Foolish disclosure is always on the prowl.
