November 18, 2014      

Consistency over time is key

Although its shares have tumbled $13 from a 52 week high of $48.36 to $35.36 (November 18th), iRobot (IRBT) is still feeling the love from Zacks.

In the process, the glow from iRobot has helped warm Zacks toward praise for the entire category: ?This is especially the case in the often-overlooked automation and robotics industry, where companies not only have great growth prospects, but have held up better than many of their peers in the recent burst of market volatility.

?The automation industry has been pretty strong and growth prospects remain solid for this space in both the near and long term.

?Furthermore, companies in this segment actually combine to have a Zacks Industry Rank that is in the top 5% overall, suggesting there are few better choices out there from an industry perspective right now.?

irobot shares

Star power

With both industrial robot and service robot sales hitting new highs, the industry has been on a decided steady growth curve since 2010, with industrial robots projected for a 12 percent growth rate through 2017 (International Federation of Robotics).

Still, it?s always nice to point to a pure-play robot manufacturer as the star in the lineup, which iRobot has decidedly occupied for some time now. The Massachusetts-based robotics leader has performed superbly from R&D to market with finesse and business acumen, accumulating an IP vault that the Patent Board ranked fifth on the list of top patent portfolios in the electronics and instruments industry, coming in ahead industry titans like Samsung (No. 6), Panasonic (No. 8).

iRobot ranked second in the “Science Strength” metric, which (in Patent Board’s words) measures the “degree to which a company’s portfolio is linked to core science.” iRobot also ranked third in “Industry Impact,” which measures how a company’s patents affect technology developed by the rest of the industry.

Zacks definitely noticed and called out iRobot for particular praise as its bull of the day.

ZACKS: iRobot has really made a name for itself by developing robots for use in the home in order to complete various cleaning tasks. Their first real big hit was the Roomba brand vacuum robot, though the company has developed a number of other robots in order to help with floor scrubbing, cleaning swimming pools and gutter cleaning, among others.

Analysts also seem to like the company’s prospects in the medium term, as full-year earnings estimates have been soaring. In fact, IRBT has seen two revisions higher for the current year in the past 30 days, compared to zero in the same time period. We also see a similar trend for the next year time frame, suggesting the longer term future for IRBT is looking increasingly promising.

We also have seen these estimate revisions translate into a higher consensus estimate, with the current year moving from $1.14/share to $1.25/share in the past 30 days, while the next year estimate has gone from $1.37/share to $1.42/share over the same period. With these revisions, IRBT is projected to see strong year-over-year EPS growth, with 43% predicted for this year and 13% for next year.

And if you are worried about IRBT reaching these goals and meeting analyst expectations, consider the recent history at earnings season. The company has posted an average surprise of close to 14.5% in the past four quarters, while it has a streak of not missing estimates that extends deep into history.

Outlook for iRobot and the industry

The automation industry has been pretty strong and growth prospects remain solid for this space in both the near and long term. But if you are looking for the best of this space iRobot could be the way to go.

Not only does it have an impressive product lineup, it is just starting to tap into new markets, suggesting that it still has plenty of room to run. Plus, the company has an amazing track record at earnings season, almost always beating expectations.