Cognex Corporation
CGNX
$50.34
+5.36%
Cognex Corporation designs and manufactures machine vision products — including vision software, vision systems, vision sensors, and industrial ID/barcode readers — that automate inspection, guidance, measurement, and identification tasks across factory and logistics environments, serving customers in automotive, electronics, consumer goods, and e-commerce fulfillment. As the long-standing pure-play leader in industrial machine vision with roughly 2,745 employees and a portfolio spanning high-margin standard products (about 85% of revenue) and application-specific engineered solutions, Cognex occupies a premium niche defined by deep algorithm/IP barriers and entrenched relationships with global OEMs and automation integrators rather than by scale manufacturing. The current investor debate centers on whether the company is entering a durable re-acceleration cycle: Q3 FY2026 delivered a 13.2% year-over-year revenue increase to $313.4M with EPS up roughly 60% and margin expansion, prompting management to raise guidance and several sell-side firms to reiterate constructive ratings. That bullish narrative is being tested against a sharp post-print share-price collapse, with investors questioning whether the demand recovery in logistics and semiconductor-related end markets is sustainable or whether the stock's premium multiple leaves it vulnerable to any deceleration in orders.…
CGNX
Cognex Corporation
$50.34
Related headlines
Investment Opinion: Should I buy CGNX Today?
Rating: Buy (accumulate on weakness). Cognex is a high-quality, debt-free machine-vision franchise whose Q3 FY2026 fundamentals inflected sharply — 13.18% revenue growth to $313.4M, a 32.17% operating margin (up from 20.86%), and $0.50 EPS versus $0.10 — yet the stock trades at $47.78, roughly 55.3% below the $74.21 average analyst target and 15.1% below even the lowest of 19 covering analysts ($55.00), with a 14-Buy/6-Hold/0-Sell consensus (mean 1.85). The core thesis is that the market is de-rating a business whose earnings power is inflecting, creating an unusually wide gap between price and fundamental estimates.
Supporting evidence is concrete: the forward PE of 23.6x on consensus FY2026 EPS of $2.39 is at parity with the Technology sector despite a 70.76% gross margin, 27.07% net margin, and a net-cash balance sheet (debt-to-equity 0.051, current ratio 3.80, $694.7M cash). Revenue has grown sequentially for three straight quarters ($268.4M → $291.3M → $313.4M), trailing free cash flow of $286.0M converts at 97.5% of operating cash flow, and the 6.08x PS and 4.05x P/B sit near the low end of their historical 21x–56x and 3.5x–10.1x bands. The implied upside to the $74.21 average target is +55.3%, and even the $55 low target implies +15.1%.
Risks that could invalidate the thesis: (1) the forward multiple depends entirely on the $2.39 consensus EPS being delivered — any cut toward the $2.27 low estimate would make 23.6x look expensive; (2) the post-earnings -18.2% two-day collapse (from $58.11 to $47.50 on 3.79M shares) shows the market is repricing the multiple, and pending target cuts from Hold-rated firms (HSBC, Truist, Baird, DA Davidson) could pressure the consensus; (3) a demand air-pocket in logistics/semiconductor end markets could retest the $34.60 52-week low (-27.6%). This Buy would downgrade to Hold if forward EPS estimates fall below ~$2.20 or if gross margin slips below 68%, and upgrade in conviction if the stock reclaims the $55–58 breakdown zone on volume. Verdict: undervalued relative to its own sales/book history and to analyst targets, though still not cheap on a PEG of 5.47 — a high-quality compounder trading at a rare discount to its fundamentals.
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CGNX 12-Month Price Forecast
The fundamental evidence favors the bulls: three consecutive quarters of sequential revenue growth, a more than 1,100 basis point operating-margin expansion, and a fortress balance sheet are hard data, while the bear case rests almost entirely on price action and multiple compression. The stock's -34.4% drawdown from $72.88 and -18.2% post-earnings selloff have pushed it to 6.08x PS and 4.05x P/B near multi-year lows, while consensus estimates of $2.39 EPS and $1.64B revenue have not been cut — an unusually wide +55.3% gap to the average target. Confidence is medium rather than high because the forward multiple depends entirely on that $2.39 EPS being delivered, and pending target cuts from Hold-rated firms could pressure the consensus further. I would upgrade to high confidence if Q4 revenue exceeds $313.4M and gross margin holds above 70%, and downgrade to neutral if consensus FY2026 EPS falls below $2.20 or the stock breaks the $34.60 52-week low.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Cognex Corporation's 12-month outlook, with a consensus price target around $72.47 and implied upside of +44.0% versus the current price.
Average Target
$72.47
20 analysts
Implied Upside
+44.0%
vs. current price
Analyst Count
20
covering this stock
Price Range
$55 - $88
Analyst target range
Coverage is robust with 19 analysts, and the distribution of 14 Buy, 6 Hold, and 0 Sell ratings yields a consensus recommendation of "buy" (mean score 1.85 on a 1–5 scale where lower is more bullish), indicating a clearly constructive but not euphoric stance. The average target price of $74.21 implies roughly +55.3% upside from the current $47.78 — an unusually wide gap that reflects how violently the stock has decoupled from fundamental estimates, since the consensus FY2026 EPS of $2.39 and revenue estimate of $1.64B have not been cut alongside the share price. That disconnect is the central tension: either the market is mispricing a high-quality compounder at a rare discount, or analysts are lagging a fundamental deterioration the tape is already discounting. The target range of $55.00 to $90.00 is extremely wide — a 64% spread from low to high — signaling high uncertainty and weak conviction even within a bullish consensus, and notably even the lowest target sits 15.1% above the current price, meaning no covering analyst models downside from here. The $90 high target likely assumes multiple expansion back toward historical peaks on accelerating logistics and semiconductor capex, sustained 70%+ gross margins, and EPS power well above the $2.39 consensus; the $55 low target implies a more conservative ~23x forward multiple on consensus earnings, essentially pricing in flat-to-modest growth and no re-rating. Institutional rating actions show a mild negative drift — HSBC downgraded from Buy to Hold on August 10, and Truist, Baird, and DA Davidson remain at Hold/Neutral — while Needham, Keybanc, and Barclays reiterated Buy/Overweight as recently as November 6, so the post-earnings collapse has not yet triggered a wave of target cuts, which may mean revisions are still pending and represent near-term risk to the consensus.
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Bulls vs Bears: CGNX Investment Factors
The bull case currently rests on harder evidence: three consecutive quarters of sequential revenue growth, a 13.18% year-over-year top-line increase, operating margin expansion of more than 1,100 basis points, a 97.5% FCF conversion rate, and a debt-free balance sheet — all confirmed by a raised guidance and a 14-Buy/0-Sell analyst consensus with a $74.21 average target. The bear case is almost entirely about price and multiple: a -34.4% drawdown from the $72.88 high, a PEG of 5.47, and a violent -18.2% two-day post-earnings selloff that implies the market is de-rating the stock even as fundamentals improve. On balance the fundamental evidence is stronger than the technical evidence, but the tape is voting against the fundamentals, which is why the consensus target gap of +55.3% is so unusually wide. The single most important tension is whether the logistics and semiconductor-related demand recovery is a durable structural automation cycle or a cyclical restocking bounce — if it is durable, the forward PE of 23.6x on $2.39 of EPS is cheap and the stock re-rates; if orders decelerate, estimates get cut and the premium multiple compresses further. Secondary but critical is whether the pending analyst revisions materialize as target cuts, which would remove the last pillar of support under the current price.
Bullish
- Profitability inflected sharply: Q3 FY2026 net income of $84.8M produced a 27.07% net margin versus just 6.38% a year ago, while operating margin jumped to 32.17% from 20.86% — a more than 1,100 basis point expansion. EPS of $0.50 versus $0.10 (+400%) confirms that incremental revenue is dropping through at very high contribution margins.
- Revenue re-accelerating sequentially: Q3 revenue of $313.4M grew 13.18% year over year and rose sequentially from $291.3M in Q2 and $268.4M in Q1 — three consecutive quarters of expansion and the strongest print in the trailing eight-quarter series. The higher-margin Standard Products and Services line carried the growth at $266.4M versus $47.0M in Application-Specific Solutions.
- Fortress balance sheet, self-funded growth: Debt-to-equity of 0.051, a current ratio of 3.80, and $694.7M of cash against negligible debt leave no solvency risk. Q3 operating cash flow of $106.4M against capex of only $2.6M generated $103.8M of free cash flow — a 97.5% conversion rate — funding R&D of $33.9M, a $14.3M dividend, and buybacks internally.
- Analyst targets imply huge upside: The $74.21 average target implies roughly +55.3% upside from $47.78, and even the lowest of the 19 covering analysts sits at $55.00 — 15.1% above the current price. With 14 Buy, 6 Hold, and 0 Sell ratings (mean 1.85), no covering analyst models downside from here.
Bearish
- Post-earnings collapse signals de-rating: Despite a strong Q3 beat and raised guidance, shares fell from $58.11 on November 3 to $47.50 on November 5 — an -18.2% two-day move on elevated volume of 3.79M shares. That pattern suggests the market is repricing the multiple, not the business, and the 1-month change of -21.94% badly lags the S&P 500's -4.99%.
- Valuation still rich on growth-adjusted basis: The trailing PE of 52.9x and PS of 6.08x represent premiums of roughly 75–150% and 50–200% versus typical Technology sector and Hardware industry averages. A PEG of 5.47 and price-to-FCF of 24.6x (a 6.0% FCF yield) argue that much of the recovery is already discounted.
- Earnings estimates are the swing variable: The forward PE of 23.6x depends entirely on consensus FY2026 EPS of $2.39 versus trailing EPS of just $0.019 — the market is paying for earnings to roughly double. Any downward revision to that $2.39 figure would instantly make the forward multiple look far less attractive.
- Technical trend structurally broken: At $47.78 the stock sits below every major moving-average proxy, only 34.5% of its 52-week range, and 34.4% below the $72.88 high. The 6-month change of -27.23% versus SPY's -0.54% confirms a persistent, stock-specific de-rating rather than beta-driven weakness.
CGNX Technical Analysis
Cognex is in a confirmed intermediate downtrend despite a still-positive one-year return of +20.84%, a divergence that reflects a violent second-half reversal from a 52-week high of $72.88 to the current $47.78 — only 34.5% of the 52-week range and just 38.1% above the 52-week low of $34.60. The stock has surrendered roughly 34.4% from its peak (max drawdown -34.42%), and at $47.78 it sits below every major moving-average proxy implied by the price series, meaning the long-term uptrend that carried shares through mid-2026 has structurally broken. Positioning near the lower third of the annual range signals momentum failure rather than a clean value entry, since the stock is still 38% above its low and has not yet tested that floor. Recent momentum is decisively negative and accelerating: the 1-month change of -21.94% and 3-month change of -28.57% both sharply underperform the S&P 500's -4.99% and -4.91% over the same windows, producing relative strength of -16.95 and -23.66 points respectively. The 6-month change of -27.23% versus SPY's -0.54% confirms a persistent, stock-specific de-rating rather than mere beta-driven weakness, and the most recent sessions show capitulation-style selling — a drop from $58.11 on November 3 to $47.50 on November 5 (an -18.2% two-day move) on elevated volume of 3.79M shares — followed by a tepid +0.60% bounce to $47.78. This pattern of a high-volume breakdown immediately after a fundamentally strong earnings report suggests the market is repricing the multiple, not the business, and rallies toward the $55–58 gap zone are likely to meet supply. Key technical levels are now well defined: immediate support sits at the October 16 low of $53.99, which has already been breached, leaving the 52-week low of $34.60 as the next major floor roughly 27.6% below current levels, while resistance is stacked at the $55–58 breakdown zone and then the $72.88 high. A beta of 1.475 means the stock is about 48% more volatile than the market, so a 10% SPY drawdown could translate to roughly a 15% CGNX decline — position sizing should account for this, and with a short ratio of 3.5 there is moderate short interest that could fuel sharp squeezes on any reclaim of $55.
Beta
1.48
1.48x market volatility
Max Drawdown
-34.4%
Largest decline past year
52-Week Range
$35-$73
Price range past year
Annual Return
+28.2%
Cumulative gain past year
| Period | CGNX Return | S&P 500 |
|---|---|---|
| 1m | -20.0% | -3.3% |
| 3m | -20.0% | -2.3% |
| 6m | -20.9% | +1.4% |
| 1y | +28.2% | +12.2% |
| ytd | +36.3% | +10.4% |
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CGNX Fundamental Analysis
Revenue is re-accelerating convincingly: Q3 FY2026 revenue of $313.4M grew 13.18% year over year and rose sequentially from $291.3M in Q2 and $268.4M in Q1, marking three consecutive quarters of expansion and the strongest top-line print in the trailing eight-quarter series. The mix is dominated by Standard Products and Services at $266.4M versus $47.0M in Application-Specific Customer Solutions, meaning the higher-margin, more scalable catalog business is carrying growth — a favorable sign for operating leverage. Compared with the year-ago Q3 FY2025 revenue of $276.9M, the company has added roughly $36.5M of quarterly sales, and consensus FY2026 revenue estimates of $1.64B imply continued mid-teens growth; the key question is whether this reflects a cyclical restocking bounce or a structural automation demand cycle, and the raised guidance suggests management sees durability. Profitability has inflected sharply: Q3 net income of $84.8M produced a 27.07% net margin versus just 6.38% in the year-ago quarter, while gross margin of 70.76% expanded from 67.64% and operating margin jumped to 32.17% from 20.86%. The gross margin trajectory across FY2026 — 71.13% in Q1, 70.65% in Q2, 70.76% in Q3 — is remarkably stable at a level well above typical industrial-hardware peers, reflecting pricing power and software content, and the operating margin expansion of more than 1,100 basis points year over year demonstrates that incremental revenue is dropping through at very high contribution margins. EPS of $0.50 in Q3 versus $0.10 a year ago (+400%) confirms the operating leverage story, though the trailing-twelve-month EPS of just $0.019 reflects the depressed prior-year base and tax distortions (the year-ago quarter carried a 71.9% effective tax rate), so forward earnings power is far better than the trailing figure implies. The balance sheet is fortress-like: debt-to-equity of 0.051, a current ratio of 3.80, and cash of $694.7M at quarter-end against negligible debt, while trailing free cash flow of $286.0M represents a 6.0% FCF yield on the $6.05B market cap. Q3 operating cash flow of $106.4M against capex of only $2.6M generated $103.8M of free cash flow (a 97.5% FCF conversion rate), and the company returned capital via $14.3M of dividends while also repurchasing stock earlier in the year — internal cash generation fully funds growth, R&D of $33.9M, and shareholder returns without external financing. ROE of 7.67% and ROA of 8.22% look modest only because they are trailing-twelve-month figures still weighed down by the weak prior-year quarters; on current-quarter annualized earnings the returns are materially higher, and the absence of leverage risk means the primary financial risk is demand cyclicality, not solvency.
Quarterly Revenue
$313387000.0B
2026-10
Revenue YoY Growth
+13.2%
YoY Comparison
Gross Margin
70.8%
Latest Quarter
Free Cash Flow
$286039000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CGNX Overvalued?
Because Cognex is profitable (Q3 net income of $84.8M), the PE ratio is the appropriate primary metric, and the gap between the trailing PE of 52.9x and the forward PE of 23.6x is the single most important valuation signal: the market expects earnings to roughly double, consistent with consensus FY2026 EPS of $2.39 versus the depressed trailing figure. That 55% compression in the multiple on a forward basis implies investors are paying a steep price for an earnings recovery that has only just begun to materialize, and the PEG ratio of 5.47 — even against strong growth — suggests the stock is not cheap on a growth-adjusted basis. The 6.08x PS ratio and 6.59x EV/Sales sit alongside a 27.4x EV/EBITDA, all elevated for an industrial hardware company, reflecting the market's premium for the software-like gross margin of 66.9% and the machine-vision franchise. Against the Technology sector and Hardware, Equipment & Parts industry averages — which typically trade in the 20–30x PE and 2–4x PS range — Cognex's 52.9x trailing PE and 6.08x PS represent premiums of roughly 75–150% and 50–200% respectively, and even the 23.6x forward PE is only at parity with the sector despite far superior margins and a net-cash balance sheet. The premium is partially justified by the 70%+ gross margin, 32% operating margin, and debt-free balance sheet, but the PEG of 5.47 and price-to-free-cash-flow of 24.6x (versus a 6.0% FCF yield) argue that much of the recovery is already discounted. Historically, Cognex's PE has ranged from roughly 32x (Q3 FY2026) to over 159x (Q4 FY2023) during its earnings trough, with the PS ratio spanning about 21x to 56x; at 6.08x PS the stock is near the low end of its own multi-year band, while the 52.9x trailing PE sits in the middle of that wide range. The current 4.05x price-to-book is also near the bottom of its historical 3.5x–10.1x range, suggesting that on sales and book value the stock has already de-rated substantially — the risk is that earnings estimates, not multiples, are the variable that disappoints, and any downward revision to the $2.39 consensus EPS would instantly make the forward multiple look far less attractive.
PE
52.9x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 32x~104x
vs. Industry Avg
37.3x
Industry PE ~37.3x*
EV/EBITDA
27.4x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on demand cyclicality rather than solvency, given debt-to-equity of just 0.051, a current ratio of 3.80, and $694.7M of cash. The real vulnerability is earnings quality: trailing-twelve-month EPS of $0.019 and net margin of 11.5% are still weighed down by the depressed prior-year base and tax distortions (the year-ago quarter carried a 71.9% effective tax rate), so the forward PE of 23.6x rests entirely on consensus EPS of $2.39 being delivered. Revenue is also concentrated in Standard Products and Services at $266.4M of the $313.4M quarterly total, and the company's end markets — automotive, electronics, and e-commerce fulfillment — are capital-spending sensitive, meaning a single large customer or vertical slowdown could move the top line quickly. Finally, the 13.18% growth rate must persist to justify the multiple; a return to the low-single-digit growth implied by the $252.3M Q4 FY2025 revenue base would break the operating-leverage story that drove the 32.17% operating margin. Market and competitive risks are dominated by valuation compression: at 52.9x trailing PE, 6.08x PS, and 27.4x EV/EBITDA, Cognex trades at roughly 75–150% and 50–200% premiums to Technology sector and Hardware industry averages, leaving little room for disappointment. A beta of 1.475 means the stock is about 48% more volatile than the market, so a 10% SPY drawdown could translate to roughly a 15% CGNX decline, and the 6-month relative strength of -26.69 points versus SPY shows the stock is already being sold on a stock-specific basis rather than as part of a sector rotation. The recent news flow is a case in point: a Zacks piece on November 5 highlighted the Q3 beat and raised guidance as attractive for long-term growth, yet the shares fell 18.2% over the following two sessions — evidence that good news is being sold and that the market's concern is the multiple, not the reported results. The worst-case scenario is a demand air-pocket combined with estimate cuts: if logistics and semiconductor orders roll over, consensus FY2026 EPS of $2.39 gets revised toward the $2.27 low estimate or below, the forward multiple re-rates toward the $55 low target's implied ~23x on lower earnings, and the stock retests its 52-week low of $34.60. From the current $47.78 that is a decline of roughly 27.6%, and a full retest of the $34.60 floor would represent a loss of about -27.6% (with the -34.42% max drawdown already realized from the $72.88 peak as a guide to how far these moves can run). A more moderate adverse case lands near the $55 analyst low target, which is actually above the current price, so the realistic downside is defined by the 52-week low rather than by any covering analyst's model.
FAQ
Ranked by severity: first, earnings-estimate risk — the 23.6x forward PE depends entirely on consensus FY2026 EPS of $2.39 versus trailing EPS of just $0.019, so any revision toward the $2.27 low estimate would instantly make the multiple look expensive and could drive a retest of the $34.60 52-week low (-27.6%). Second, demand cyclicality — revenue is concentrated in Standard Products and Services ($266.4M of the $313.4M quarterly total) and in capital-spending-sensitive end markets like automotive, electronics, and e-commerce fulfillment, so a logistics or semiconductor order air-pocket would hit the top line quickly. Third, valuation and momentum risk — the -18.2% two-day post-earnings collapse from $58.11 to $47.50 on 3.79M shares shows the market is de-rating the multiple even on good news, and the 6-month relative strength of -26.69 points versus SPY confirms stock-specific selling. Fourth, macro/beta risk — a beta of 1.475 means a 10% SPY drawdown could translate to roughly a 15% CGNX decline, amplified by pending target cuts from Hold-rated firms (HSBC, Truist, Baird, DA Davidson) that have not yet fully materialized.
The 12-month scenario framework assigns a 50% probability to the base case with a $55–$74 range, a 30% probability to the bull case at $74–$90, and a 20% probability to the bear case at $34.60–$47.78. The base case is most likely: fundamentals hold, revenue grows mid-teens toward the $1.64B consensus and EPS toward $2.39, but the multiple stays compressed as the market waits for proof of durability, leaving the stock to grind back toward the $55 low target and the $58 breakdown zone. The bull case requires logistics and semiconductor automation capex to prove structural rather than a restocking bounce, with gross margins above 70% and positive estimate revisions closing the gap to the $74.21 average and $90 high targets. The bear case is an estimate cut toward or below $2.27 combined with a wave of post-earnings target cuts, driving a retest of the $34.60 low — a roughly -27.6% move from the current $47.78.
The answer depends on the metric, and that split is the heart of the debate. On trailing figures the stock is expensive — 52.9x PE, 6.08x PS, 27.4x EV/EBITDA, and a PEG of 5.47 — representing premiums of roughly 75–150% on PE and 50–200% on PS versus Technology sector and Hardware industry averages, which typically trade at 20–30x PE and 2–4x PS. On forward earnings it is far more reasonable: 23.6x on consensus FY2026 EPS of $2.39 is at parity with the sector despite a 70.76% gross margin and a net-cash balance sheet. Against its own history the stock has already de-rated substantially — 6.08x PS sits near the low end of a roughly 21x–56x band and 4.05x price-to-book is near the bottom of a 3.5x–10.1x range. The market is therefore pricing in a successful earnings recovery but refusing to pay a premium multiple until it is proven, which is why the stock looks undervalued relative to analyst targets and its own sales/book history while still not cheap on a growth-adjusted basis.
On a risk/reward basis the setup is asymmetric but not low-risk: the $74.21 average analyst target implies +55.3% upside, and even the lowest of 19 covering analysts sits at $55.00, 15.1% above the current $47.78, with a 14-Buy/6-Hold/0-Sell consensus (mean 1.85). The fundamental case is supported by Q3 FY2026 revenue of $313.4M (+13.18% YoY), a 32.17% operating margin versus 20.86% a year ago, and $286.0M of trailing free cash flow at 97.5% conversion on a debt-free balance sheet. The biggest downside risk is that the 23.6x forward PE rests entirely on consensus EPS of $2.39 being delivered; a cut toward the $2.27 low estimate would make the multiple look expensive, and a retest of the $34.60 52-week low would mean roughly -27.6% from here. It is a good buy for long-horizon investors comfortable with a beta of 1.475 and a PEG of 5.47 who can accumulate in tranches and tolerate further volatility, but it is not a low-volatility entry — the -18.2% two-day post-earnings selloff shows how violently this stock can reprice.
CGNX is better suited to a long-term hold than a short-term trade. The company is in a mid-cycle earnings recovery — three consecutive quarters of sequential revenue growth ($268.4M to $291.3M to $313.4M) and operating margin expansion of more than 1,100 basis points — but the stock's beta of 1.475, -34.42% max drawdown, and -18.2% two-day post-earnings collapse make near-term price action highly unpredictable, and the 3.5 short ratio means squeezes and air-pockets can both be violent. The dividend yield of just 0.90% with a 47.7% payout ratio provides minimal income support, so the return case rests on multiple re-rating and earnings delivery rather than carry. Earnings visibility is improving but still hinges on cyclical end-market capex, which argues for a minimum holding period of 18–24 months to allow at least two more quarterly prints to validate the demand recovery and for pending analyst revisions to settle. Short-term traders should treat the $55–58 breakdown zone as resistance and the $53.99 October low as the line in the sand, but the risk/reward is designed for patient accumulation rather than tactical trading.