iRobot (NASDAQ:IRBT) is currently facing some financial headwinds that have many investors questioning whether to hold or sell. The company’s recent financials reveal a net income loss of approximately $145.5 million, alongside a significant free cash flow decline to -$33.3 million. With total debt reaching around $227 million and a relatively modest stockholder equity of about $61 million, leverage concerns are mounting. These factors, combined with ongoing investments in research and development, suggest that the company’s financial position warrants careful consideration before making any trading decisions. iRobot is set to release its earnings tomorrow. Currently, its debt-to-equity ratio remains relatively steady compared to the past year. Looking ahead, the interest debt per share is projected to rise to 8.84 in 2025, while the book value per share may decline to 1.97. With more passive investors showing interest in the household durables sector, iRobot could be an appealing option. Let’s analyze whether the stock is trading at a fair price as we approach December.
IRobot financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of IRobot, including all of IRobot's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of IRobot assets, the company is considered highly leveraged. Understanding the
composition and structure of overall IRobot debt and outstanding corporate bonds gives a good idea of
how risky the capital structure of a business is and if it is worth investing in it. Please read more on our
technical analysis page.
How important is IRobot's Liquidity
IRobot
financial leverage refers to using borrowed capital as a funding source to finance iRobot ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. IRobot financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to IRobot's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of IRobot's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between IRobot's total debt and its cash.
Breaking down IRobot Further
The entity reported the previous year's revenue of 681.85
M. Net Loss for the year was (145.52
M) with profit before overhead, payroll, taxes, and interest of 551.52
M.
Asset Breakdown
166.1 M
Non Current Assets Total
339.3 M
Total Current Assets
Deferred Long Term Asset Charges
434.7 M
Net Tangible Assets
| Total Assets | 482.24 Million |
| Other Assets | 1.09 |
| Total Current Assets | 339.25 Million |
| Other Current Assets | 21.63 Million |
| Non Current Assets Total | 166.15 Million |
| Non Currrent Assets Other | 18.02 Million |
| Intangible Assets | 3.05 Million |
| Net Tangible Assets | 434.71 Million |
| Deferred Long Term Asset Charges | 36.93 Million |
A penny saved is a penny earned, and for iRobot (NASDAQ:IRBT), high debt levels raise questions about its financial health.
The company carries total debt of $227.1 million against a market cap of just $99.75 million, indicating leverage that could amplify risks if cash flows weaken. Despite a cash position of $134.3 million, its free cash flow stands at -$33.3 million, highlighting ongoing cash burn. With a current ratio of 1.73X and total current liabilities of $218.2 million, liquidity concerns are evident, especially given the negative income before tax of -$145.1 million. Investors should weigh whether the company's leverage and cash flow trajectory justify holding or selling IRBT shares..
Will IRobot newest gain continue?
iRobot’s Jensen alpha has dipped to -0.29, indicating the stock’s recent momentum has slowed. While a negative alpha suggests underperformance, it doesn’t guarantee a decline—sometimes it’s just a temporary pause. If the company can bounce back, there’s still potential for gains, especially if other signals point to a recovery. Keep an eye on upcoming earnings and market trends to see if iRobot can regain its upward path.
The stock has shown above-average volatility lately, which can make timing trades tricky.
Higher volatility, especially in downturns, can lead to sharper price swings and increased stress for investors. During these times, rebalancing portfolios by diversifying can help manage risk and prepare for potential rebounds.Investing in iRobot presents a nuanced picture. While the stock's current valuation at a market value of
3.18 suggests some room for growth, the overall consensus among analysts leans toward holding, with a lowest estimated target price of $10.87 and a highest of $13.25. The valuation real value of $5.36 indicates that the stock might be undervalued, but caution is warranted given the possible downside price of just $0.0318. If you're considering a position, keep in mind that the expected forecast value is around $2.25, and the potential upside could reach approximately $11. Staying attentive to these figures can help you gauge whether the risk-reward balance aligns with your investment goals..
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Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time basis at the beginning of the pandemic and eventually acquired a real taste for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI.
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