iRobot, KUKA and other robotic stocks exceed earnings expectations

by Frank Tobe

04 May 2017

iRobot (IRBT:NASDAQ)

iRobot‘s stock jumped 15.75% on news that it’s Q1/17 earnings exceeded analyst expections and had jumped 28.8% from Q1/16. As a result, iRobot adjusted upward their 2017 revenue forecast. iRobot now expects full-year 2017 revenue of $780 million to $790 million, which should result in earnings per share of $1.45 to $1.70 (up from EPS guidance of $1.35 to $1.65 previously).

Total Q1/17 units shipped of iRobot’s household cleaning robots was 704,000, a 28% rise from 550,000 shipped in Q1/16. According to CEO Colin Angle, iRobot has shipped over 15 million robotic home floor cleaners through 2016.

Last year iRobot divested its Defense and Security Division for $45 million to a VC which shortly thereafter launched Endeavor Robotics. Thus iRobot is now exclusively a commercial robotics provider. Year-to-date, iRobot’s stock has risen 38% from $58 to $80.

KUKA AG (KU2:ETR) / Midea Group (000333:SHE)

KUKA AG reported Q1/17 sales revenues of $862 million which was up 25.6% compared to Q1/16 revenue. Order backlog for the same period was up 30.6%. KUKA’s outlook for 2017 is around $3.4 billion, up 7.5% over 2016 ($3.16 billion). KUKA’s listed shares – only 5.4% remain with institutions and private investors, the rest, 94.6%, is held by Midea – remain listed but lightly traded as part of the agreement with Midea and will continue to be traded for at least 3 years.

Midea Group, a consumer products manufacturer, is one of the top 50 Chinese publicly-traded companies with revenues of $22 billion. It reported 2016 profits up by 15.6% year-over-year. In addition to its 2016 acquisition of KUKA for approximately $3.9 billion (according to Bloomberg), it just recently acquired Israeli Servotronix for $170 million. Servotronix adds to Midea’s industrial automation acquisitions by being a motion control provider for robotics, printing, machine tools and electronics industries.

Midea chairman and CEO Paul Fang said, “This strategic alliance represents another milestone of Midea’s expansion in industrial automation and intelligent manufacturing. We believe that Servotronix’ technological leadership and innovation in motion control will generate significant synergies with Midea in terms of value chain integration and new market development. By leveraging each other’s complementary capabilities and resources, the two companies will join forces to develop exciting new products and explore growth opportunities going forward.”

Midea Group press releases regarding their acquisition of KUKA said almost the same thing: “By leveraging each other’s complementary capabilities and resources….”

Intuitive Surgical (ISRG:NASDAQ)

Intuitive Surgical, a medical equipment provider and inventor of the da Vinci surgical robot system, reported $5.09 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $3.97. Intuitive Surgical had a net margin of 27.21% and a return on equity of 14.24% with revenue of $674.20 million for the quarter, compared to the estimate of $664.72 million. During the same period in the previous year, the firm earned $4.42 EPS. Intuitive’s revenue for the quarter was up 13.4% on a year-over-year basis. ISRG has climbed over 30% so far this year, from $642 to $837.

ROBO Global Robotics & Automation Index

iRobot and Intuitive Surgical are members, and KUKA used to be a member, of the 80+ stocks included in the ROBO Global Robotics & Automation Index, a leading indicator of the robotics and automation market. KUKA was dropped when it was acquired by Midea. Even though KUKA has revenues of around $3.4 billion, when combined with Midea’s $22 billion, the percentage of robotics-related revenue is only 13% which is too little to qualify Midea for membership in the index. Also, Midea only trades on the Shenzhen Stock Exchange which, at the present time, ROBO Global doesn’t cover.

For more information about the index or the 80+ member companies, go to ROBO Global’s website.