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Northrop Grumman Corporation (NOC), iRobot Corporation (IRBT), 3D Systems Corporation (DDD): The Robots Are Coming

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Slowly but surely robots are moving out of the lab and making important changes in society. Monumental changes are easy to spot in retrospect, but at the moment they can be difficult to identify. As we speak, robots are revolutionizing everything from military systems, to manufacturing, to household cleaning.



DDD Total Return Price data by YCharts

Military Systems

Northrop Grumman Corporation (NYSE:NOC) recently released a video of its X-47B drone successfully landing on an aircraft carrier. Unmanned drones are not exactly earth shaking news. The U.S. has been using drones for years. The X-47B is revolutionary, because it is one of the first drones to complete a carrier landing only using computer systems. X-47B is a proof of concept to develop a fleet of drones that automatically follow waypoints, refuel in midair and land on aircraft carriers. Northrop Grumman Corporation (NYSE:NOC) aims to do all of this with more computer control and less human intervention, thus driving down costs.

Northrop Grumman Corporation (NYSE:NOC)America’s current generation of military drones has a problem. They are expensive and need humans to babysit them. The need for multiple human operators to be constantly present increases labor costs, and makes a drone system only slightly cheaper than a comparable manned system.

The X-47B is an important tool to help Northrop Grumman Corporation (NYSE:NOC) provide value as the Department of Defense downsizes. The winding down of the wars in Afghanistan and Iraq has driven the company’s three year revenue growth rate of -10.3%. Regardless, the United States isn’t going to stop fighting wars altogether. Northrop Grumman Corporation (NYSE:NOC)’s earnings per share (EPS) are expected to stabilize around $7.54 in 2014. With its current stock price around $90, you can buy a piece of this innovating giant at a forward price to earnings (P/E) ratio around 12.

Home Economics

iRobot Corporation (NASDAQ:IRBT) is more than a collection of stories by Isaac Asimov. iRobot Corporation (NASDAQ:IRBT) the company produces a number of robots for civilian and military uses. Its most famous product is the vacuuming Roomba robot. According to the company’s estimates, it has been able to capture 10% of the vacuuming market in North America. By expanding into wet floor care and the outdoor cleaning market, it is pushing robots further into everyday life, and increasing its addressable market from $7 billion to $14 billion.

iRobot Corporation (NASDAQ:IRBT) has been consistently profitable. It has managed to develop a wide portfolio of robots for security and households without driving itself into debt. Its balance sheet is clean with a quick ratio of 3.1. The downside is that the company is trading at a P/E ratio around 45. Compared to other giants like Whirlpool, iRobot Corporation (NASDAQ:IRBT) is a small company fighting in a very competitive consumer durables market. It is a great robotics company to watch, but at such valuations it is risky.

Manufacturing

3D Systems Corporation (NYSE:DDD) is revolutionizing manufacturing and prototyping with its wide range of 3D printers. For small production run and objects produced with expensive materials, 3D printers can offer substantial cost savings. Instead of taking a large amount of material and removing atoms until the desired form has been created, 3D printers use additive manufacturing build and an object piece by piece.

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