Why iRobot's Shares Jumped
Jul 25th 2012 1:05PM
Updated Jul 25th 2012 1:12PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of robot maker iRobot (NAS: IRBT) jumped as much as 20% today after reporting earnings.
So what: Revenue increased slightly to $111.4 million in the second quarter from $108.1 million a year ago, but easily topped the $107.4 million analysts had expected. Net income of $7.4 million, or $0.26 per share, was also better than the $0.10 in EPS analysts had expected.
The company's home-robot business was the driver of earnings, growing 50%, and made up for weak defense spending.
Now what: The company is going through a transition away from high defense spending to more of a consumer-based product. So far, the transition appears to be going well and Roomba and Scooba are becoming more common household items. The stock currently trades at 19 times forward earnings estimates, a steep price for a company barely growing revenue, but if the stock pulls back a bit from today's gain, this could be a good bet on the future of consumer robotics.
Interested in more info on iRobot? Add it to your watchlist by clicking here.
The article Why iRobot's Shares Jumped originally appeared on Fool.com.Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. Motley Fool newsletter services have recommended buying shares of iRobot. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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