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Weekly Bot Brief on Robotic Research and Investment Review 4-26-2019

POSTED 04/28/2019

"There is no force on earth more powerful than an idea whose time has come"   -Victor Hugo

Bot Index Highlights:Bot Index vs. S & P 500 4-30-2019

As the Bot Brief has indicated over the past two distributions, the earnings season has begun and the implications to robotic stocks has been significant. Reporting last week were nine Bot Index components. Of those, all but two were expecting improving earnings over their comparable 2018 quarter. During the week, however, only one of Wall Street analysts’ earnings expectations was met. Six of the nine experienced earnings ahead of guidance (in some cases significantly above estimates). One company, iRobot, whose outlook was expected to produce a reduction from comparable 2018 results, surprised on the upside. However, despite earning $.78 which exceeded both the $.59 that analysts had anticipated and the $.71 of last year, the stock took a substantial hit. For the week, shares fell 22.34% primarily upon the quarter’s revenue miss from $251 million to $237.7 million.

Two companies experienced earnings below analyst expectations. Rockwell Automation reported $2.04 eps versus expectations from the Street of $2.08. The stock declined 6.05% and, with iRobot’s falloff, contributed to the underperformance of the Bot Index relative to the S & P 500. Lincoln Electric was the other bot that failed to meet what Wall Street had predicted. It was not treated quite so horribly as it did exceed 2018’s number. The bots fell 1.21% while the broad market increased 1.20%. It should be noted that all the Japanese-based corporations were lackluster during the trading week.

Accuray Inc. was the leading gainer, rising some 6.10%. Interestingly, it was the sole company whose earnings the analysts accurately predicted. The corporation’s quarter came in at a loss of $.04, bettering the 2018 figure by six cents.  On the upside, many of the companies in the defense industry performed well. Drone manufacturer AeroVironment rose 3.56% and Lockheed Martin gained 4.48%. However, intraweek trading saw Lockheed jump 10% and Northrup Grumman increase from $278.76 per share to $290.45% before settling down to $283.13. United Technologies rose 2.76% as it revised 2018 guidance to $7.80 - $8.00. Likewise, Lockheed’s expected earnings of $5.99, far exceeded projections for a $4.33 quarter and Northrup’s production of $5.06 versus the consensus $4.60 led the company to increase guidance from $18.50 - $19.00 to a range between $18.90 to $19.30 in the 2019 year.

Amazon considerably exceeded 2019 first quarter earnings target of $4.72 and comparable quarter 2018’s $3.27 by turning in $7.09. The stock was up 4.78% but probably could have been much higher except for management’s announcement that it would be expending $800 million in the second quarter to engineer one day delivery of merchandise to Amazon Prime customers. Some analysts felt that cash contribution would likely harm the quarter’s profits. Coincident with this declaration of the company’s capital investment was an article noting the testing of robotic door to door delivery system. Perhaps, the latest news regarding Google/Alphabet’s landmark approval by the FAA to start delivering goods by drones in Virginia served as a stimulant to Amazon’s aggressive delivery objective. In any regard, the latest acceleration in drone delivery activity will certainly stimulate the robotic revolution. 

Member: American Economic Association, Society of Professional Journalists, United States Press Association. Institute of Chartered Financial Analysts, Robotic Industries Association.

The Bot Brief is a weekly newsletter designed for economists, investment specialists, journalists and academicians. It receives no remuneration from any companies that may from time to time be featured and its commentaries, analysis, opinions and research represent the subjective views of Balcones Investment Research, LLC. Due to the complex and rapidly changing nature of the subject matter, the company makes no assurances as to the absolute accuracy of material presented