iRobot Equity Report FIN 422 – Student Managed Investment Fund

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Presentation transcript:

iRobot Equity Report FIN 422 – Student Managed Investment Fund James Edstrom| Taylor Field | Micah Stark

Company Information Founded in 1990 by Colin Angle Originally Focused on Commercial Robots 9/11 Exploration Robots Developed “Roomba” Product Line in 2002 Accounts for Majority of Sales Transitioned in 2016 to “Consumer As Our Customer” Moto Eliminated Commercial Robots “Braava” Mop Launched March 2016 Developing “Connected” Robots

Financial Information IRBT – NASDAQ Exchange Primary Sector and Industry: Consumer Goods in Appliances Sell or Hold at current price Market Capitalization: $1.8 Billion Estimated Target Price: $39.39

Institutional Investors Largest Institutional Investors Company Percent Owned Cumulative Institutional Investors 63.7% The Vanguard Group 8.58% BlackRock Fund Advisors 7.89% Lord Abbett & Co 5.3% Columbia Wanger Asset Management, L.P. 4.6% Oppenheimer Funds, Inc. 4.08%

Stock Performance 96.59% Growth

Vacuum Market by Type

Market Share of Robotic Vacuums

Financial Ratios iRobot P/E = 36.8 Price/Book = 4 Price/Cash Flow = 27.2 Gross Profit Margin = 50.4% Revenue Growth = 2.94% Industry P/E = 27.1 Price/Book = 3.2 Price/Cash Flow = 14.0 Gross Profit Margin = 26.8% Revenue Growth = 19.5%

Short Interest * Last 6 months

Forecasting Estimates Year 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Revenue Growth % 15% 10% 7% 5% Revenue 605 695 799 919 1,011 1,112 1,190 1,274 1,363 1,458 1,531 R&D 80 92 106 122 124 126 135 144 154 165 173 Home Robots Margin 49% Total Operating Expenses 262 296 341 392 396 424 454 486 520 556 584 Operating Income 62 58 67 77 120 143 153 164 175 187 197 Taxes 19 21 20 31 37 39 42 45 48 50 Net Income 47 44 49 61 93 110 118 151 *Estimates In Millions Estimated Stock Price $39.39

Future Business Risks New Competitors Samsung (150x Market Cap) LG (6x Market Cap) Dyson Bissel Neato Limited Vendors Heavily Reliant Upon China Only a Couple Major Producers Elimination of Commercial Division Consistent Income

Management & Governance CEO: Colin Angle (Chairman, CEO and Founder since 1990) Eliminated 20% of Holdings in Last Year COO: Christian Cerda (since 2003) CFO: Alison Dean (since 2005)

iRobot Equity Report Decision Sell or Hold Elimination of Commercial Application Business Influx of Major Competitors Potential Trade Issues with Limited Chinese Producers CEO has Eliminated 20% of Holdings