E IRobot Entry Point To A Beaten-Down Growth Stock

Conclusion

To this date, iRobot shares are down approximately 60% from its ATH of $130. The overall opinion is very negative, reflected in very low earnings expectations. Also, 52% of the float is shorted. During this recent downtrend, the overall business model has not changed much. Going forward it appears to be strengthened when looking at the product portfolio. In the long-term and with more positive earnings surprises the stock price will most likely adjust. Based on my intrinsic Valuation of iRobot I came up with a value of $80.44 per share. Overall iRobot has a low double-digit growth rate and will be even more profitable in the future. Given the current circumstances, the stock is priced reasonably low at $53 and offers a great buying opportunity.

1 2 3
View single page >> |

Disclosure: I am long IRBT.

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Dan Richards 3 months ago Member's comment

#iRobot has too many competitors for me to seriously consider it's stock. I see nothing that differentiates it from the multitude of other similar products out there. $IRBT

Robert Templin 3 months ago Author's comment

The competition is one of the reasons why iRobot trades at such a big discount in comparison to last year. I agree with you, the competitors in the robot vacuum cleaner market are a threat to market share. It is also one of the reasons why iRobot trades at such a big discount in comparison to last year. But this is mostly only the case for the cheaper Roomba models and even these sold extremely well during Q4. This could be partly due to its strong brand recognition. Because a lot of people call robot vacuums in general Roombas, no matter what kind of robot vacuum they are talking about. Furthermore, iRobot has a patented two roller brush system which is exceptionally good for the deep cleaning of carpets. My friends, who own an iRobot vacuum cleaner are also very happy with the durability. Overall the strength of iRobot lays in the high-end product category. The self-emptying feature is an advantage over nearly all other competitors and makes it feel like an autonomous cleaning experience. Through a broader product portfolio and overall growing robotic markets, iRobot is still positioned pretty well.

Thank you for reading and your feedback. I appreciate it! :)

Alexis Renault 3 months ago Member's comment

Why does it matter what people call their electric vacs? It matters what they buy. I call all bandages "band aids" but I can't remember when I actually purchased that particular brand. $IRBT

Robert Templin 3 months ago Author's comment

It leads to higher brand popularity, more people will be aware of the company and its products. It is free marketing, it does not necessarily lead to higher sales. But the probability of more sales increases just by getting the name out there. Moreover, iRobot is the company with the highest market share in the robot vacuum market.

Alexis Renault 3 months ago Member's comment

Brand recognition is of course great, I'm just not convinced it's enough of a differentiating factor. It depends if it translates to brand loyalty. Some companies like Apple have tons of brand loyalty. I'm don't iRobot has nearly as much.

Robert Templin 3 months ago Author's comment

You are right, but few companies come close to the brand loyalty of Apple. Especially in such a competitive market that Apple is in. Tesla comes also to my mind. But iRobot does not need to be Apple or Tesla to offer a great value at the current price point. In comparison to the overall automotive or phone market, the consumer robotics market is growing rapidly. This in combination with the fact, that iRobot will also be a serious competitor in the mopping and mowing space gives me enough confidence that revenue will continue to grow. I also especially like the vision of the CEO, that the goal of iRobot is to be responsible for all the annoying and painful tasks at home in the long-run. They will not continue to only be a vacuum company.