[$IRBT] iRobot Stock Analysis & Insights
Why I am NOT investing in iRobot although it might be an good investment
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Welcome to Momentous Insights where we
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Insight the Future | Speak the Truth | Change with Facts
To get outsized returns in the irrational stock market it all balls down to two of my favorite quotes by Thomas Phelps & Benjamin Graham which is 👇🏾👇🏾👇🏾
To make money in stocks you must have the vision to see them, the courage to buy them and the patience to hold them. Patience is the rarest of the three. - Thomas Phelps
The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists. - Ben Graham
You will see those quotes very often in my insightful docs because it's so true. Ok now on to the doc.. My goal is to find unjustified pessimism which leads to value and have the patience to hold that value unless the facts change. So that is what I'll focus on. Today I will try to explain the value i found in roughly 7 min. My name is Mya Parker and I’m a 14 year old investor, financial youtuber, enthusiastic gardener, and Christian, amongst other things but not a financial advisor.
Although really when it comes to investing, “I’m just a studier of history and a speculator of the future based on history.” - Mya Parker.
This is momentous insights and today I will give you my brief insight on the company iRobot Corporation $IRBT
Highlights
2.79B Market Cap
172.6M Income TTM | 16.8 P/E which is much lower than their 5yr Average of 32.5 P/E |18.00%+ Estimated EPS Growth next 5Y | 28.50% EPS Growth past 5Y | PEG Ratio 0.89 | Since Q1 2018 iRobot has beat EPS estimates every single time
1.541B Revenue TTM that’s grown every single year without fail since 2012 | 1.9 P/S which is lower than their 5yr Average of 2.2 P/S |18.30% Sales Growth past 5Y | Company guiding 1.67B-1.71B+ Revenue for 2021 or 17%-20%+ Revenue Growth for this Year
47.5% Gross Margins 5 yr Average
22.30% ROE
3.5 Price/Book which is lower than their 5yr Average of 4 Price/Book
3.2 Current Ratio | 2.3 Quick Ratio
Insightful Diligence
Problems
1. Problem
The problem is that time on this earth is limited, humans attentionspand short, and lots of people would not want to clean or drive or sweep and complete other time consuming, repetitive tasks but prefer do something they like and are passionate about.
Solutions
2. Solution
The solution to making more out of the limited time we have is to not spend time on things that we can automate and still get good results. We can do this by innovating & engineering out of these problems to create & bring to market things such as robots to do these tasks for us.
iRobot is a leading global consumer robot company that designs and builds robots that empower people to do more. Their consumer robots help people find smarter ways to clean and accomplish more in their daily lives.
The company iRobot is the answer to the huge problem of limited time and many yet growing amount of time consuming, repetitive tasks. iRobot’s value proposition is primarily automating the cleaning of your home. Thereby saving you time and allowing you to do other things.
This company delivers its solutions in various ways. The retail segment part of sales to deliver their solutions is important though the DTC sales channel part of their company is very intriguing and i expect to see grow and benefit the company long term. Which is important as a potential long term investor in $IRBT.
3. Customer Feedback on the Solution
The customer feedback on the solutions is that the products are worth the money & mostly fulfill the value proposition for the price. Hence you’d understand why they have a High NPS.
4. How they make money
iRobot makes money by selling various products & services. I mean we’ve all seen these little bots.
Go to their websites to see all various things they offer and the prices of which they offer them https://investor.irobot.com/products
5. The pandemic effect of growth & the future of this company bc of it
The pandemic accelerated the growth of adoption by shining a light on the RVC value proposition - Hectic, fluid schedules leaves people less time for burdensome, time consuming tasks. Though I as is management aren’t worried about this bc adoption should still grow due to this>>> -Work from home evolves to workplace flexibility ̶ Pet adoption surges ̶ RVCs become an increasingly popular gift
Competitors
6. Competitors
The company with the second most market share is a chinese company that is growing and taking market share in the rvc space it seems and is named ecovacs. Which should be expected though as you can see down below iRobot has majority market share.
7. Market
Management
8. Management & Ownership Breakdown
I noticed when looking at management institutions own 90%+ of this company which i don’t find intriguing at all. BlackRock owns almost a 20% stake in this company and management just 1.6%. Therefore when im researching companies im looking for a reason to say no and to stop looking at it so i wont further research it but just know that is the reason im not buying in. Im just not comfortable with that so far in my DD. If management isnt extremely excited about the company neither should I. Its like someone telling me to bet on a particular team to win as they are super sure they will win but that person didn’t even put up their own money first. OK yes i may be exaggerating a little but im not fond at the lack of insider ownership in such a “innovative” company. Although i have to give them their credits of beating estimates all the time, efficient capital allocation, conservative guidance, etc.
Traction
9. Traction & History
iRobot was founded 1990 & Headquartered in Bedford,MA which is in USA of course & IPOd in 2005. This is where they are now:
iRobot has 35M+ units sold
iRobot has 15M+ connected robots
iRobot has 11M+ connected, engaged owners as of Q1 2021 from 9.7M+ in 2020, 5.3M in 2019, 2.3M in 2018, & 600K in 2017. (This could be like a profit per x figure or revenue per x figure etc.)
10.28% Profit Margin
11.22% Operating Margin
46.86% Gross Margin
1.54B in Revenue
Good Balance Sheet
Objections
10. Objection
Pitti the Pessimist: I don’t like this company as an investment, you don’t either right as you seemed to not be super excited about it in your article
Mya the Optimist: Yes we finally agree on something after what now 2 or so deep conversations on various companies. I don’t like the company as an investment. Also im not a financial advisor.
Perfection is just a direction - Elayne Quirin
Do remember perfection is just a direction and i don't buy or sell stocks bc of relative or absolute valuations.. I use this as guidance nothing more nothing less.
What I Believe & What I’m Doing
11. What I Believe & What I’m Doing
Personally I am not buying although a company that consistently beats consensus estimates since the beginning of 2018 is an intriguing company. To be undervalued means to not be valued correctly so if someone is buying i wouldn’t be so against it as it does seem to consistently not be valued correctly for a long period of time.
Thankyou for reading. Hopefully you found this as insightful, if you did follow me on Twitter, Discord, and YouTube for more!
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As of June 10th, 2021 at 10:00 AM CDT im invested in $DBX $TTCF $IDKFF $PKKFF $FUV