iRobot Stock Struggling to Overcome Resistance Ahead of Earnings

IRBT will report Q2 earnings on Wednesday, July 28

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iRobot Corporation (NASDAQ:IRBT) is an American technology company that designs and builds consumer robots. IRBT is well known for creating the home cleaning robot with the introduction of the Roomba Robot Vacuum. iRobot's product line, including the Roomba and the Braava robots, features proprietary technologies and concepts in cleaning, mapping, and navigation. Heading into Tuesday's trading, IRBT was last seen down 0.1% at $89.00.

iRobot stock has increased about 24% year-over-year and 32% since bottoming at an annnual low of $67.55 in September. Additionally, shares of IRBT have grown by 10% year-to-date. However, iRobot stock is down a massive 54% since spiking up to its record high of $197.40 near the end of January, with long-term pressure stemming from the descending 40-day moving average.

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iRobot is scheduled to release its financial results for the second quarter of fiscal 2021 after market close on Wednesday, July 28. In recent history, the security has outperformed earnings expectations on all of its past four reports. For Q2 of 2020, IRBT exceeded analyst expectations with a margin of $0.77 and reported an EPS of $1.06. For Q3 of 2020, iRobot's EPS jumped up to $2.58 and beat estimates by a whopping margin of $1.58. For Q4 of 2020, IRBT posted a drop in earnings down to $0.84 per share, but still beat estimates by a margin of $0.53. For Q1 of 2021, iRobot reported an EPS of $0.41 and beat expectations by a margin of $0.32.

It proves to be difficult to find a company that is more fundamentally sound and presents a better valuation and more growth potential than IRBT. iRobot stock currently trades at a price-earnings ratio of 14.86, despite maintaining consistent annual revenue growth and net income growth for multiple years. IRBT also holds an impressive balance sheet with over $500 million in cash and just $55 million in total debt. Overall, iRobot stock may be an ideal portfolio option for growth and value investors, alike.

In the options pits, there looks to be plenty of room for pessimism to unwind. This is per the equity's 10-day put/call volume ratio of 2.64 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 94th annual percentile.

Shorts have been crowding the security, too. Short interest rose 19.7% during the past two reporting periods, which now accounts for 20.4% of the stock's total available float. At IRBT's average pace of daily trading, it would take shorts more than two weeks to buy back these bearish bets.

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