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iRobot Corporation (IRBT)’s Earnings Beat Shows Bright Future

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It's Time to Buy These 2 Defense StocksWhen the Boston bombings took place, one local company was there to lend a hand in resolving the situation and protecting the public. It was recently featured on the Bloomberg network discussing the use of iRobot Corporation (NASDAQ:IRBT)’s Packbot in helping apprehend the Boston bombers. For those of you unfamiliar with the robot, “The PackBot is a remote-controlled tactical mobile robot with the capability of detecting and disposing of certain explosive devices.” As someone who went to school in Boston, thank you iRobot.


iRobot Corporation (NASDAQ:IRBT)’s earnings per share increased 950% to $0.21 in the fiscal quarter against $0.02 last year. Revenue increased almost 9% to $106 million. The company raised guidance and investors responded by bidding iRobot Corporation (NASDAQ:IRBT)’s stock up 15% to reward the earnings beat.

The company has zero debt on its balance sheet, has steadily been improving operations, and is now putting its emphasis on its consumer division. Based on the strength of the first quarter, the company raised guidance going forward and now expects full-year earnings between $0.80 and $1.00 per share. In addition to zero debt, the company has $7 in cash per share, giving investors some financial assurance and iRobot greater flexibility to pursue new projects or acquisitions.

One of the weaknesses that iRobot Corporation (NASDAQ:IRBT) has always had is what I consider to be a poor job making the public aware of its various products, and building brand awareness. In addition to the recent positive press regarding the bombings, the company recently made strides in building product awareness, marketing to Patriot fans at the NFL games (IRobot is based out of Boston) and creating a series of short “sitcoms” (watch a 50 second one) about iRobot products cleaning the house of one of New England’s starting linemen, Vince Wilfork.

iRobot Corporation (NASDAQ:IRBT)’s Packbot is also still being used to explore the Fukushima Nuclear reactor, going where humans cannot. During the Louisiana Gulf oil spill, the company provided an underwater robot that was able to validate the underwater plumes, not only generating some press for the company, but proving the value of their robots.

IRobot has received some new competition from military contractor Northrop Grumman Corporation (NYSE:NOC), which is trying to take some of iRobot Corporation (NASDAQ:IRBT)’s defense market share. According to the analysis in The Motley Fool column linked above, at least at present, iRobot shouldn’t lose too much sleep, although Northrop is a much larger company than iRobot, worth in excess of $17.5 billion, while iRobot Corporation (NASDAQ:IRBT)’s market cap sits south of $800 million. The point being, Northrop Grumman Corporation (NYSE:NOC) can afford to throw much more in marketing and lobbyists should it choose to.

The product in question is Northrop Grumman Corporation (NYSE:NOC)’s CUTLASS unmanned ground vehicle (UGV for short.) According to a managing director at the company:

Our CUTLASS vehicle is setting new standards in the UGV market and significantly enhancing the ability of users to handle hazardous threats safely. It is more dexterous, cost effective and, as a package, four times faster than any other UGV. The vehicle is already in service across the U.K. and has proven itself to be robust and capable in the most demanding environments.

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