IRBT Stock Prediction: iRobot Sweeps Up The Competition


This article was written by Julia Masch, a Financial Analyst at I Know First.


IRBT Stock Prediction: iRobot Sweeps Up The Competition

The true winners in the consumer robot industry are going to be determined for the next decade.” – iRobot CEO Colin Angle

(Source: Wikimedia Commons)

iRobot (NASDAQ: IRBT) has had phenomenal returns over the past 6 months with returns exceeding 70%. So what prompted the meteoric rise for the company leading the autonomous vacuum revolution with its Roomba products?

Concluding Q2 With More To Come

iRobot finished the first half of its fiscal year on a high note with raised guidance for the rest of the year for a number of reasons. The Q2 results were released on July 24 and included a number of optimistic features including quarterly earnings of $0.37 in comparison to last year’s Q2 earnings of merely $0.27. IRBT did not only blow away their previous earnings, but also surpassed analyst expectations by more than doubling the analyst anticipated $0.18.

(Source: Yahoo Finance)

Additionally, revenues increased from last year’s $183.1 million to $226.3 million, once again beating many analysts’ expectations. Both domestic and international revenues grew aggressively thanks to growth in all major regions: international revenues increased 33.7% to $114.8 million and domestic sales increased 14.6% to $111.5 million. Sales improved across the entire world with 51% growth in Europe, the Middle East, and Africa; 31% growth in Japan; and 15% in the United States.

These higher sales in combination with marketing programs iRobot thinks will further boost revenue led the robot vacuum company to raise its full year guidance for 2018 to $1.06-$1.08 billion. Moreover, IRBT also raised expectations for earnings from $2.15-$2.40 per share to $2.30-$2.50 per share on this optimistic note. Additionally, the company teased a slew of new products in the near future which kept investors interested and led the stock price to continue rising. In August alone, IRBT jumped 43.2% only on these positive notes despite the fact that no new information was released since the reporting of Q2’s earnings.

Q3 earnings will be released on October 23.

New Products With Potential

iRobot has always been a trailblazer in the world of robot vacuums. From its initial Roomba, to a new brushless version, to its newest smart robot vacuum that implements new navigation technology, iRobot has led the robot vacuum revolution. On September 6, the company announced its newest product line which includes the new Roomba i7+ autonomous vacuum which has features such as a self-emptying dust bin and visual adaptive technology that can create a map of rooms in the house. In this way, the Roomba will be able to navigate the house and identify and distinguish different rooms so it can be utilized in combination with other smart home features to be sent to particular rooms if necessary.

The New Roomba i7+ (Source: iRobot)

Additionally, the self-cleaning technology gets rid of the hassle of having to clean the vacuum. And that’s not all, the dust bin is also larger and when it is full will return to its “clean Base” automatically when necessary to empty its contents. This will also lead to some recurring revenue as the bin empty into a disposable bag stored within the unit. While these bags will last a while, this will add to the recurring revenue the company already has. Moreover, the newest vacuum is also the company’s most expensive at $949.

However, the company also provided two cheaper alternatives for consumers not willing to pay such a hefty price tag: the i7 model comes without the Clean Base feature for $699 (the dock can still be purchased for an additional $299 if the customer opts to add the self-cleaning feature) and there is also a new e5 model which includes smart home functionality like Alexa and Google Home integration which will sell for $449. All of these new products will set iRobot up well for the upcoming holiday season.

Making the Most of Market Share

iRobot makes the transition from regular vacuums to robot vacuums as seamless as possible so it is no wonder IRBT has the largest share of this growing market. The robot vacuum still has great potential for rapid growth as more consumers integrate smart technologies like Roombas into their households. The global vacuum cleaner market has already seen an annual growth rate of 8%; in 2012 it was a $5 billion dollar industry whereas it has grown to $7.5 billion in 2017. Robot vacuums had a global share of over 20% of the entire vacuum market and is still growing. The global vacuum cleaner market is still expected to grow at 5% annually and will reach nearly $10 billion by 2022 and in this time the percent of robot vacuums could more than double. On top of this, iRobot controls over 60% of the robotic vacuum cleaner market and even as more competitors enter, iRobot should maintain more than half of the market with their innovative technologies.

Looking Ahead

While the Roomba is the most famous of iRobot’s products, its Braava jet floor-mopping robot also has massive potential. Braava sales increased over 50% YoY driven by intense international demand.

Braava floor mopping jet (Source: iRobot)

Additionally, IRBT is poised to enter the multi-billion dollar market for robotic lawn mowers. In the meantime, iRobot will invest in driving long term revenue growth by forsaking its bottom line and focusing on more intuitive and advanced products. The massive upside potential of the entire smart vacuum, mop, and lawnmower market illuminate a bright future for iRobot.

Technical Analysis

Currently, technical indicators show bullish momentum for IRBT. The stock price is well above both the 50 day (purple) and 200 day (light blue) simple moving averages (SMA). Moreover, in summer, the 50 day SMA surpassed the 200 day SMA indicating another positive signal. Additionally, both MACD indicators are above 0 and after reaching overbought conditions with an RSI above 80, iRobot’s RSI has returned to a more neutral RSI of 60, indicating that the stock is neither overbought nor oversold so a trend reversal is not imminent.

(Source: Yahoo Finance)

Current I Know First Bullish Forecast For IRBT

The I Know First self learning algorithm has a bullish outlook for iRobot over the short and long run. The strongest signal is over the one year time horizon at 370.07 with an also high predictability indicator of 370.07.

How to read the I Know First Forecast and Heatmap


iRobot has massive upside potential in the future as it continues innovating and creating the most convenient robot vacuums for consumers. Additionally, the growing market for vacuums in general and robot vacuums in particular will only translate to major gains for IRBT. The newest products as well as products in the works like the robot lawnmower will only increase iRobot’s revenues, especially as the holiday season approaches. Moreover, the I Know First algorithmic prediction and the technical indicators solidify this bullish outlook for IRBT.

Past I Know First Success With IRBT

On September 16, the I Know First algorithm gave a bullish prediction with a signal of 45.70 and predictability indicator of .52 for IRBT over a 3 month time horizon as part of the tech stocks package. In accordance with the forecast, iRobot gained 40.47% over the predicted period.

Stock Market Trends

Current I Know First subscribers received this bullish IRBT forecast on September 16.

Please note-for trading decisions use the most recent forecast. Get today’s forecast and Top stock picks.