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Cognex Q3 Earnings: Can NasdaqGS:CGNX Hit Its $0.33 EPS Target?

in EARNINGS/INVESTING IDEAS by

Cognex Corporation (NasdaqGS:CGNX) is scheduled to report Q3 earnings results after markets close for trading on October 28, 2020.

The company is expected to report earnings of $0.33/share on revenue of $213.7 million. The consensus earnings per share (EPS) of $0.33/share is based on a poll of 12 analysts and represents a growth in eps of 35.4% over the same quarter last year, when the company reported earnings of $0.24/share.

The revenue forecast of $213.7 million based on a poll of 15 analysts implies a year-over-year (YoY) growth in revenue of 16.6%. Last year the company reported $183.3 million in revenue for the quarter.

Expected to report EPS growth of 35.4% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $213.70 $183.32 16.6%
EPS $0.33 $0.24 35.4%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from Cognex Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.11 $0.18 59.0% Beat
Q1, 2020 $0.08 $0.11 30.8% Beat
Q4, 2019 $0.13 $0.11 −15.7% Missed
Q3, 2019 $0.20 $0.24 18.0% Beat
Q2, 2019 $0.23 $0.28 20.4% Beat
Q1, 2019 $0.16 $0.19 16.5% Beat
Q4, 2018 $0.22 $0.26 17.1% Beat
Q3, 2018 $0.37 $0.45 22.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 28, 2020, the stock price reacted by increasing 2.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $64.63 $65.98 2.1% Increase
April 27, 2020 $48.80 $55.85 14.4% Increase
February 13, 2020 $54.87 $53.76 −2.0% Decline
October 28, 2019 $52.50 $51.97 −1.0% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.58, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.58 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

Cognex Corporation is currently trading at $67.43/share, down −3.6% for the day. The company is trading at approximately 94.0% of its 52-week high of $71.76/share. The company’s stock price is up 2.2% since the last earnings report and down −1.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 53.00 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:CGNX Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 82.55 and a forward P/E multiple of 81.07.

Cognex Corporation’s current share price also implies a price-to-book (P/B) multiple of 8.48. The following table summarizes some other key fundamental ratios:

Data as of October 26, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 28, 2020
Stock Price (Current) $67.43
P/E Ratio 82.6x
P/E Ratio (Fwd) 81.1x
PEG Ratio −2.6
Total Debt / Total Capital 0.2%
Levered Free Cash Flow $192.3 million
EV / EBITDA 79.2x

Finbox

Cognex Corporation is a large-cap stock with a market capitalization of $11.669 billion and a total enterprise value of $11.268 billion. The company operates in the Information Technology sector and the Electronic Equipment, Instruments & Components industry.

Cognex Corporation provides machine vision products that capture and analyze visual information in order to automate manufacturing and distribution tasks worldwide. Its machine vision products are used to automate the manufacture and tracking of discrete items, including mobile phones, aspirin bottles, and automobile tires by locating, identifying, inspecting, and measuring them during the manufacturing or distribution process. The company offers VisionPro software, a suite of patented vision tools for advanced programming; Cognex Designer that allows customers to build vision applications with a graphical, flowchart-based programming environment; and Cognex deep learning vision software. It also provides general-purpose vision systems for vision tasks, including part location, identification, measurement, assembly verification, and robotic guidance; and vision sensors for vision applications, such as checking the presence and size of parts; the In-Sight product line of vision systems and sensors. In addition, the company offers ID products comprising DataMan image-based barcode readers and barcode verifiers, as well as vision-enabled mobile terminals for industrial barcode reading applications. It sells its products to consumer electronics, automotive, consumer products, food and beverage, pharmaceuticals, and medical devices industries, as well as through a network of distributors and integrators. The company was founded in 1981 and is headquartered in Natick, Massachusetts.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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