iRobot Corporation IRBT is poised to gain from innovation capabilities, expansionary vision, operational initiatives, manufacturing in China and Malaysia and expanding direct-to-consumer sales. The company’s partnership with various major electronics retailers in EMEA and Japan is likely to expand its customer base. Also, IRBT continues to invest in higher-value robotics, computer vision, machine learning and complex mechanical design to improve the core functionality of the robots, which is expected to be beneficial in the quarters ahead.
iRobot's diverse product portfolio has been a key driver of its success over time. Its diversified product portfolio has been benefiting it over time. The company noted that revenues generated from selling premium and mid-tier robots represented 78% of the first three quarter’s total robot revenues. iRobot remains focused on introducing new products into the market and innovating the existing ones. Some of its recent product innovations include the enhanced version of the Genius Home Intelligence platform, Roomba Combo 10 Max, Roomba Essential robots, iRobot H1 handheld vacuum and Roomba j7+ robot vacuum.
The company is focused on expanding its recurring revenue sources, direct-to-consumer sales channel and business from the online platform. In addition, investments to build brand awareness via campaigning through traditional retail partners on its app and website and online retailers are likely to significantly boost product demand in the quarters ahead.
In the past year, this Zacks Rank #3 (Hold) company’s shares have gained 11.2%, in line with the industry.
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Downsides of IRBT
Increasing promotional activities and higher losses related to purchase commitments with the contract manufacturers are affecting the company’s operating margin performance. In the first nine months of 2024, iRobot recorded an operating loss of $41.9 million. The operating margin was (8.2%). In 2024, the company expects to incur an operating loss in the range of $84-$75 million.
iRobot’s international presence keeps it exposed to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar may require it to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry for the company.
Stocks to Consider
Some better-ranked companies are discussed below.
RBC Bearings Incorporated RBC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
RBC delivered a trailing four-quarter average earnings surprise of 4.9%. In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2025 earnings has increased 1.2%.
Enersys ENS presently sports a Zacks Rank of 1. The company delivered a trailing four-quarter average earnings surprise of 2.2%.
In the past 60 days, the consensus estimate for ENS’ fiscal 2025 earnings has increased 10%.
Applied Industrial Technologies AIT presently carries a Zacks Rank #2 (Buy). AIT delivered a trailing four-quarter average earnings surprise of 5.3%.
In the past 60 days, the consensus estimate for AIT’s fiscal 2025 earnings has inched up 1.1%.
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iRobot Corporation (IRBT) : Free Stock Analysis Report
Enersys (ENS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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