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IRBT – Markets expect significant Uniform ROA declines, and management may have concerns about their products, margins, and customer relationships

December 7, 2020

  • iRobot Corporation (IRBT:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings with an 18.8x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may have concerns about their products, margins, and customer relationships

  • Specifically, management may be overstating the potential of Roomba and Braava amidst quarantine and iRobot Genius’s value proposition in terms of its ability to improve customer relationships. Additionally, they may have concerns about the margin impact of scaling production in Malaysia. In addition, they may lack confidence in their ability to sustain growth beyond 2020, execute strategic initiatives to develop their customer relationships and software capabilities, and maintain their liquidity position