Stock Analysis

At US$71.10, Is It Time To Put Cognex Corporation (NASDAQ:CGNX) On Your Watch List?

  •  Updated
NasdaqGS:CGNX
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Cognex Corporation (NASDAQ:CGNX) saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Cognex’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Cognex

What is Cognex worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 12.24% above my intrinsic value, which means if you buy Cognex today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $63.35, then there isn’t really any room for the share price grow beyond what it’s currently trading. Although, there may be an opportunity to buy in the future. This is because Cognex’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Cognex generate?

earnings-and-revenue-growth
NasdaqGS:CGNX Earnings and Revenue Growth March 22nd 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Cognex's earnings over the next few years are expected to increase by 55%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? It seems like the market has already priced in CGNX’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping tabs on CGNX, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Diving deeper into the forecasts for Cognex mentioned earlier will help you understand how analysts view the stock going forward. At Simply Wall St, we have the analysts estimates which you can view by clicking here.

If you are no longer interested in Cognex, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

What are the risks and opportunities for Cognex?

Cognex Corporation provides machine vision products that capture and analyze visual information in order to automate manufacturing and distribution tasks worldwide.

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Rewards

  • Earnings are forecast to grow 13.85% per year

Risks

No risks detected for CGNX from our risks checks.

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