Cognex (CGNX) AI Stock Analysis

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Cognex

(NASDAQ:CGNX)

Rating:64Neutral

Price Target:―

Cognex scores a 64, reflecting a well-balanced position of strong financial health and cash flow generation against challenges in technical performance and high valuation. While strategic initiatives in AI and logistics are promising, the current technical indicators and P/E ratio suggest caution. Earnings call insights show both growth opportunities and sector-specific challenges, contributing to a moderate outlook.

Positive Factors

Financial Performance

Q4 results were solid, beating consensus on all major metrics.

Market Demand

End market demand is holding up, with logistics still expected to show strong growth in 2025.

Strategic Initiatives

Better opex containment and strategic capital deployment.

Negative Factors

Earnings Performance

EPS has been unable to break above the roughly 75c to $1.50 range going back 15 years.

Growth Challenges

The long-term growth framework will almost certainly be lowered, with expectations moving from 15% to 10%.

Technology and Operations

CGNX has wonderful technology, but the CGNX of tomorrow likely needs to look/operate differently vs. the CGNX of the past.

Cognex (CGNX) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$4.99B

Dividend Yield1.04%

Average Volume (3M)2.74M

Price to Earnings (P/E)43.5

Beta (1Y)1.41

Revenue Growth8.56%

EPS Growth18.99%

CountryUS

Employees2,914

SectorTechnology

Sector Strength77

IndustryHardware, Equipment & Parts

Share Statistics

EPS (TTM)0.16

Shares Outstanding167,864,780

10 Day Avg. Volume1,867,296

30 Day Avg. Volume2,741,074

Financial Highlights & Ratios

PEG Ratio3.75

Price to Book (P/B)3.45

Price to Sales (P/S)0.00

P/FCF Ratio30.45

Enterprise Value/Market Cap0.98

Enterprise Value/Revenue1.37

Enterprise Value/Gross Profit7.76

Enterprise Value/Ebitda8.68

Forecast

1Y Price Target

$37.13

Price Target Upside24.93% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering10

Cognex Business Overview & Revenue Model

Company DescriptionCognex Corporation (CGNX) is a leading provider of vision systems, vision software, vision sensors, and surface inspection systems used in manufacturing automation. The company operates predominantly in the industrial manufacturing and logistics sectors, offering advanced machine vision technology that enables computers to emulate human vision in order to automate tasks. Cognex's core products provide solutions for quality inspection, robot guidance, and product tracking across various industries, including automotive, electronics, consumer products, and logistics.

How the Company Makes MoneyCognex makes money primarily through the sale of its machine vision systems and software products. The company's revenue model centers around the direct sales of its hardware and software solutions to manufacturers and logistics companies seeking to automate their production and distribution processes. Key revenue streams include sales of vision systems that are used for tasks like automated quality inspection and barcode reading. Cognex also generates income from software licenses, maintenance services, and training programs. Significant partnerships with major integrators and OEMs (Original Equipment Manufacturers) further enhance their market reach and contribute to earnings. The company's ability to innovate and develop cutting-edge vision technology is a critical factor in maintaining its competitive advantage and driving revenue growth.

Cognex Financial Statement Overview

Summary

Cognex demonstrates a strong financial position with impressive gross margins and low leverage. While revenue growth is modest, the company maintains healthy operational margins and cash flow metrics. The balance sheet remains robust with a high equity ratio, yet the declining ROE and net profit margin highlight areas of concern for long-term profitability. Overall, Cognex is financially stable with good cash flow management, but it faces challenges in sustaining high profitability and growth.

Income Statement

Positive

Cognex's TTM (Trailing-Twelve-Months) revenue showed a modest growth of 0.57% from the previous year, indicating relative stability in revenue generation. The TTM gross profit margin stands strong at approximately 68.3%, reflecting the company's efficiency in managing production costs. However, the net profit margin of 12.81% in the TTM indicates a decline from previous years, suggesting increasing operational costs or other expenses impacting profitability. The EBIT and EBITDA margins are relatively healthy at 13.80% and 17.01% respectively, underscoring a solid operational performance despite the revenue challenges.

Balance Sheet

Positive

The company's balance sheet reflects a robust equity position with a strong equity ratio of 74.8% in the TTM, signifying financial stability. The debt-to-equity ratio is low at 0.05, indicating low leverage and a conservative approach to financing. Return on Equity (ROE) for the TTM is approximately 8.14%, which, while decent, shows a downward trend compared to previous years, suggesting moderate efficiency in using shareholder equity to generate profits.

Cash Flow

Positive

Cognex's TTM free cash flow grew by 21.23%, showcasing significant improvement in cash generation capabilities. The operating cash flow to net income ratio of 1.49 reflects efficient cash conversion from earnings. The free cash flow to net income ratio of 1.38 indicates strong cash flow relative to net income, suggesting effective management of operational cash needs. However, a drop in operating cash flow compared to prior years may indicate potential challenges in sustaining cash generation levels.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
919.75M	914.51M	837.55M	1.01B	1.04B	811.02M
	Gross Profit
628.18M	625.79M	601.24M	721.90M	759.83M	604.60M
	EBIT
126.95M	115.06M	130.70M	246.23M	315.10M	170.53M
	EBITDA
164.44M	147.75M	144.58M	288.29M	335.38M	232.53M
	Net Income Common Stockholders
117.75M	106.17M	113.23M	215.53M	279.88M	176.19M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
278.19M	246.05M	332.05M	854.25M	907.36M	372.31M
	Total Assets
2.01B	1.99B	2.02B	1.96B	2.00B	1.80B
	Total Debt
77.17M	70.22M	78.60M	48.21M	25.58M	26.23M
	Net Debt
-61.69M	-115.88M	-124.05M	-806.04M	-881.78M	-242.84M
	Total Liabilities
524.04M	475.35M	513.06M	519.75M	573.57M	538.50M
	Stockholders Equity
1.49B	1.52B	1.50B	1.44B	1.43B	1.26B
Cash Flow		Free Cash Flow
162.46M	134.04M	89.84M	223.74M	298.61M	229.10M
	Operating Cash Flow
175.94M	149.08M	112.92M	243.41M	314.06M	242.40M
	Investing Cash Flow
43.14M	-38.97M	32.27M	-4.45M	-252.54M	169.44M
	Financing Cash Flow
-211.70M	-118.42M	-125.61M	-240.37M	-141.62M	-316.87M

Cognex Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price29.72

Price Trends

50DMA

28.29

Positive

100DMA

32.17

Negative

200DMA

35.56

Negative

Market Momentum

MACD

0.82

Positive

RSI

53.72

Neutral

STOCH

16.47

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CGNX, the sentiment is Neutral. The current price of 29.72 is above the 20-day moving average (MA) of 29.43, above the 50-day MA of 28.29, and below the 200-day MA of 35.56, indicating a neutral trend. The MACD of 0.82 indicates Positive momentum. The RSI at 53.72 is Neutral, neither overbought nor oversold. The STOCH value of 16.47 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CGNX.

Cognex Risk Analysis

Cognex disclosed 23 risk factors in its most recent earnings report. Cognex reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 2 New Risks

Our future capital needs are uncertain and may be influenced by various factors, including strategic initiatives, which could impact our financial condition and operating results. Q4, 2024

Our financial performance varies quarterly due to seasonal and cyclical purchasing patterns and the timing of large customer orders, which can lead to challenges in accurately forecasting our financial results. Q4, 2024

Cognex Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VNT	75 Outperform	$5.30B	14.58	35.88%	0.28%	-3.59%	-11.30%
ESE	74 Outperform	$4.61B	39.09	9.66%	0.18%	8.40%	20.03%
NOVT	74 Outperform	$4.32B	61.45	9.73%	―	6.52%	1.60%
ITRI	74 Outperform	$5.12B	20.47	17.73%	―	7.10%	58.52%
MKSI	71 Outperform	$5.69B	25.30	9.50%	1.04%	-1.14%	―
CGNX	64 Neutral	$4.99B	43.46	8.02%	1.04%	8.56%	18.99%
Sector *	61 Neutral	$11.29B	10.07	-7.05%	2.96%	7.47%	-10.75%

* Technology Sector Average

Performance Comparison

CGNX

Cognex

29.72

-17.53

-37.10%

ESE

Esco Technologies

178.40

68.86

62.86%

NOVT

Novanta

120.13

-44.33

-26.95%

ITRI

Itron

112.63

3.09

2.82%

MKSI

MKS Instruments

83.82

-46.42

-35.64%

VNT

Vontier

35.26

-5.02

-12.46%

Cognex Earnings Call Summary

Earnings Call Date:Apr 30, 2025

(Q1-2025)

% Change Since: 9.14%|

Next Earnings Date:Jul 30, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook with notable achievements in revenue growth, logistics segment performance, and effective capital return strategies. However, challenges remain in the automotive segment, China market, and gross margin pressures. The impact of tariffs adds an element of uncertainty, but management expects to mitigate these effects.

Q1-2025 Updates

Positive Updates

Revenue Growth and Margin Expansion

Revenue grew 5% year-on-year on a constant currency basis, marking a third consecutive quarter of organic growth. Adjusted EBITDA margin expanded by nearly 500 basis points year-on-year, demonstrating effective cost management.

Logistics Segment Growth

Logistics revenue continued to grow double-digits year-on-year, marking the fifth consecutive quarter of growth and the highest revenue level since Q1 of 2022.

New Product Launch - In-Sight 8900

Cognex launched the In-Sight 8900 smart camera, bringing embedded AI to OEM customers, enhancing their ability to tackle complex manufacturing challenges.

Successful Capital Return

More than $100 million returned to shareholders through stock buybacks in Q1, the largest quarterly buyback since Q1 of 2022.

Negative Updates

Automotive Segment Weakness

Automotive revenue was down year-on-year due to declines in EV battery investment and tentativeness in large capital projects.

Challenges in China

Revenue in Greater China was down 9% due to lower consumer electronics revenue and competitive pricing pressures.

Gross Margin Pressure

Adjusted gross margin declined by 120 basis points year-on-year, driven by unfavorable mix and FX headwinds.

Tariff-Related Uncertainty

The tariff situation remains fluid and poses a potential risk, although Cognex expects to substantially mitigate the direct cost impact.

Company Guidance

In the Cognex First Quarter 2025 Earnings Conference Call, the company provided guidance for the upcoming fiscal periods, highlighting key metrics and strategic directions. For the first quarter, Cognex reported a 5% revenue growth year-on-year on a constant currency basis, with significant contributions from the Logistics and Semiconductor industries, although Automotive remained weak. Operating expense discipline led to a nearly 500 basis point expansion in adjusted EBITDA margin, exceeding expectations. For the second quarter, Cognex anticipates revenue between $235 million and $255 million, with continued strength in Logistics but caution in Automotive. The company expects adjusted gross margins to remain in the high 60% range, and adjusted EBITDA margins between 18.5% and 21.5%. Additionally, Cognex announced strategic objectives to become a leader in AI technology for industrial machine vision, enhance customer experience, and expand its customer base, which will be discussed in detail at their upcoming Investor Day.

Cognex Corporate Events

Executive/Board ChangesDividendsFinancial Disclosures

Cognex Reports Q1 2025 Financial Results

Positive

Apr 30, 2025

On April 30, 2025, Cognex Corporation announced its financial results for the first quarter of 2025, reporting a 2% increase in revenue year-on-year, or 5% on a constant-currency basis, driven by its logistics and semiconductor businesses. The company also declared a quarterly cash dividend of $0.08 per share and announced a CEO transition, with Matt Moschner set to succeed Robert J. Willett as CEO on June 27, 2025. Despite economic uncertainties and a downturn in the automotive market, Cognex maintained strong financial performance with a significant increase in operating income and net income per diluted share compared to the previous year.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.