Robots, vacuum cleaners and robot vacuum cleaners: invest in iRobot

Роботы, пылесосы и роботы-пылесосы: инвестируем в iRobot

iRobot CorpIRBT57.90 $BuyService in partnership with Tinkoff Investments. Quotes are updated every 15 minutes

iRobot (NASDAQ: IRBT) is an American manufacturer of robots for the consumer sector. The company's shares fell sharply, but it has prospects. Although problems with production in China may adversely affect its reporting.

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What do they earn

iRobot designs and sells cleaning robots, as well as accessories for them, but third-party companies in China and Malaysia are engaged in production. iRobot also has Root robots to teach kids how to code, but their share in the revenue is so insignificant, what the company does not say, how much they occupy in the total sales structure.

According to the annual report, 89,39% the company's revenue comes from robotic vacuum cleaners, and 10,61% – robots for wet cleaning.

Revenue by country and region:

  • USA - 48,18%;
  • Europe, Middle East and Africa - 30,06%;
  • Japan - 14,23%;
  • other unnamed countries and regions — 7,53%.

Through direct sales, the company receives 12%, and 88% sales are made through retail chains.

Роботы, пылесосы и роботы-пылесосы: инвестируем в iRobot

Arguments in favor of the company

Something there about the uprising of the machines. The current situation in the US labor market in low-skilled areas may lead to a large-scale reception of the company's robots in America.

iRobots mainly do house cleaning. But, Firstly, no reason to count, that the corporate sector will not be able to take advantage of these robots. And secondly, the rise in the cost of labor in the United States, in principle, leads to an increase in the cost of the work of housekeepers, so the upper middle class may well start moving to robots en masse.

Роботы, пылесосы и роботы-пылесосы: инвестируем в iRobot

Position. The company has a huge market share in its niche of robotic vacuum cleaners.. At the same time, in absolute terms, it is very inexpensive.: capitalization of only 1.5 billion. Together, these circumstances make the company very attractive for a takeover by some consumer electronics manufacturer..

Logistics. Most of the company's manufacturing contractors are located in China and Malaysia. It has its own problems., but tactically there are positive moments: in these countries, the cost of production is still growing significantly more slowly, than in developed.

  my_trade @ 2010-12-16T15:37:00

This does not mean, that iRobot management can relax, - it’s just that the company’s costs may turn out to be somewhat lighter compared to those, whose production is located mainly in the USA and Europe.

Роботы, пылесосы и роботы-пылесосы: инвестируем в iRobot

Market share of sales of robot vacuum cleaners, as a percentage of the total

iRobot Other companies
North America 69% 31%
Europe, Middle East and Africa 43% 57%
Japan 66% 34%
A world without Taking Into Account China 53% 47%

What can get in the way

Concentration. According to company report, 21,8% all of its revenue comes from one unnamed retail chain. A review of the relationship with this customer could adversely affect its reporting.

Hello from Trump. Chinese-made robots subject to Trump-era tariffs 25%, which somewhat restrains the development of iRobot.

Not that. A significant part of the company's revenue comes from the premium segment - robots are more expensive 500 $. It's not good for the situation., when US consumer sentiment worsens, and therefore the sale of such equipment, as in iRobot, may start to fall.

Still, the logistics. Another outbreak of covid in China, combined with rising cost of raw materials in the world, threatens to spoil the company's reporting this half of the year.

Suffice it to say, that logistical problems and costs led iRobot to an operating loss in 2021: operating margin was −0.1% of revenue, Profit was generated only through non-core operations.. It is possible that these problems will worsen in the near future..

Роботы, пылесосы и роботы-пылесосы: инвестируем в iRobot

Роботы, пылесосы и роботы-пылесосы: инвестируем в iRobot

Resume

18 October 2021 I have already taken these shares for 83 $ for the purpose of selling 95 $ over the next 14 Months. However, everything turned out a little earlier.: share target price reached 16 days.

Rising costs and falling profitability of the company led to a strong drop in shares after that.: now they cost a little more 55 $. After the fall, the company is relatively inexpensive: P / S she has about 0,93.

But I'm afraid, that iRobot's logistical problems could negatively affect its reporting and lead to an even greater drop in quotes, and worsening consumer sentiment in the US looms over sales growth prospects. At the same time, in the long term, this company looks like a very interesting investment..

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