Is It Too Late to Consider Cognex After 30% Rally in 2025?

Thinking about what to do with Cognex stock? You are not alone. With the share price up nearly 30% so far this year and enjoying an 18.2% jump over the past twelve months, more investors are taking a fresh look at this industrial automation player. But despite that strong momentum, people are split: some see a tempting growth opportunity, while others worry the run-up is already baked into the price.

Much of the story is tied to bigger-picture market trends. Recent advances in factory automation and the growing adoption of machine vision solutions have people betting Cognex has room to run. In the short term, the stock has edged higher, gaining 1.1% over the past week and 5.3% in the last month, which suggests buyers are still nibbling even after those larger gains. However, the scars of a tough few years are visible in the five-year chart, which still shows the stock down almost 30% compared to its peak. That history feels a world away from the current optimism.

Of course, optimism is not the only yardstick that matters. When we roll up our sleeves and look strictly at valuation metrics, something interesting jumps out: Cognex scores a zero out of six checks for being undervalued. That means, at least by traditional measures, the market does not see it as a bargain.

So, what do those valuation approaches actually tell us, and can they really help us make decisions about Cognex’s future? Let us dive into the details, and then explore an even more insightful way to make sense of the stock’s value.

Cognex scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Cognex Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's true worth by projecting its future cash flows and discounting them back to their value today. For Cognex, this method uses both analyst forecasts and extrapolated data to map out the company's expected financial path.

Currently, Cognex generates $172.9 million in Free Cash Flow (FCF). Looking ahead, analysts estimate that FCF could reach $331.2 million by the end of 2028. Beyond five years, further projections are based on reasonable growth rates, resulting in a forecast of $515.0 million by 2035. All cash flows are considered in US dollars.

Using these projections, the DCF model calculates an intrinsic value of $42.60 per share. Comparing this figure to the current share price shows that Cognex stock is approximately 8.7% overvalued. While not dramatically mispriced, the analysis suggests that the current market enthusiasm is already reflected in the valuation.

Result: ABOUT RIGHT

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Cognex.

Simply Wall St performs a valuation analysis on every stock in the world every day (check out Cognex's valuation analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Cognex Price vs Earnings

The price-to-earnings (PE) ratio is a widely used metric to value profitable companies like Cognex. It directly compares a company’s current share price with its earnings per share. For investors, the PE ratio offers a quick glimpse at how much the market is willing to pay for a dollar of a company’s earnings. This makes it especially useful for established, consistently profitable businesses in the technology and industrial sectors.

However, not all PE ratios are created equal. Expectations around future growth and a company’s risk profile play a big part in determining what an appropriate or “normal” PE should be. Faster-growing companies or those with steadier earnings often command higher PEs, while those in riskier or slower-moving sectors typically trade at lower multiples.

Cognex currently trades at a PE ratio of 63.7x, which stands out sharply compared to both its electronic industry average of 24.0x and the broader peer average of 32.7x. At first glance, this suggests investors are pricing in high growth or strong quality. To take this a step further, we use the Simply Wall St “Fair Ratio.” This proprietary metric considers Cognex’s unique earnings growth prospects, risks, profit margin, industry, and size. It aims to provide a more objective benchmark than sticking to peer or industry averages alone. For Cognex, the Fair Ratio comes in at 33.4x. Comparing the two, Cognex’s PE is nearly double the Fair Ratio, signaling that the stock is more expensive than its underlying fundamentals would suggest.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Cognex Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is essentially your story—your personal perspective on a company—backed up by your own estimates for future revenue, earnings, and margins, which together help you arrive at a fair value that actually fits your view of the business.

Narratives connect the dots between what makes Cognex unique, the financial forecasts you believe in, and a clear fair value, making your investment decisions more meaningful and authentic. Simply Wall St’s Narratives feature, available in the Community page and used by millions of investors, empowers you to craft your own view, quickly compare it to current market prices, and decide when a stock looks attractive to buy or sell.

What sets Narratives apart is that they automatically update as new information, such as earnings, news, or analyst forecasts, comes in, so your outlook evolves alongside the company’s real-world journey. For example, some Cognex investors may be highly optimistic, expecting revenue to jump over 10% each year and targeting a fair value above $58, while more cautious investors might focus on competition and economic headwinds, leading them to set a fair value closer to $35.

Do you think there's more to the story for Cognex? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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