Cognex Corporation, a leading provider of machine vision and industrial barcode reading solutions, reported its financial results for the fourth quarter and full year 2023. The company's revenue for the fourth quarter of 2023 was $196.7 million, reflecting an 18% decrease compared to the same period in 2022. For the full year 2023, Cognex reported a revenue of $837.5 million, representing a 17% decline from 2022.
Robert J. Willett, CEO of Cognex, commented on the results, stating, "Our fourth quarter results reflected a challenging, but stable business environment. Revenue across most of our end markets was down year-on-year in the quarter, and our largest customers continued a pause in significant capital expenditures."
Cognex's net income for the fourth quarter of 2023 was $11.2 million, which is an 80% decrease from the same period in 2022. The company's adjusted earnings per diluted share (non-GAAP) for the quarter were $0.11, reflecting a 61% decrease from the prior year's quarter.
Willett also highlighted the company's focus on cost management and long-term growth prospects, stating, "We remain focused on strict cost management, while continuing to invest in our long-term growth prospects. We launched a record number of new products in 2023 and commenced a multi-year investment in our emerging customer initiative to expand our customer base. We believe these actions position us well to capitalize on exciting industry trends as growth returns."
Looking ahead, Cognex provided its financial outlook for the first quarter of 2024, expecting revenue to be between $190 million and $205 million. The company also anticipates adjusted gross margin to be in the high-60% range and an adjusted effective tax rate of 16% for the first quarter of 2024.
In response to the financial results, Cognex's shares have moved 6.5% and are currently trading at a price of $38.51.
Cognex's full 8-K submission is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $806 | $726 | $811 | $1,037 | $1,006 | $880 |
| Gross Margins | 74% | 74% | 75% | 73% | 72% | 72% |
| Net Margins | 27% | 28% | 22% | 27% | 21% | 18% |
| Net Income (M) | $219 | $204 | $176 | $280 | $216 | $157 |
| Net Interest Expense (M) | -$0 | $1 | -$0 | -$1 | -$0 | $0 |
| Depreciation & Amort. (M) | $18 | $22 | $22 | $17 | $16 | $17 |
| Diluted Shares (M) | 177 | 175 | 177 | 180 | 175 | 173 |
| Earnings Per Share | $1.24 | $1.16 | $1.0 | $1.56 | $1.23 | $0.91 |
| EPS Growth | n/a | -6.45% | -13.79% | 56.0% | -21.15% | -26.02% |
| Avg. Price | $47.88 | $46.18 | $58.36 | $81.95 | $61.13 | $38.5 |
| P/E Ratio | 38.0 | 38.81 | 57.22 | 51.54 | 49.3 | 42.31 |
| Free Cash Flow (M) | $186 | $232 | $229 | $299 | $224 | $145 |
| Current Ratio | 8.54 | 5.04 | 4.55 | 3.39 | 3.82 | 4.99 |
Based on a thorough analysis, the stock of Cognex is likely fairly valued at a price of $38.51 per share. This valuation is supported by the company's higher-than-average gross margins, indicating a potential competitive advantage.
In terms of growth factors, Cognex exhibits stable revenues with a modest yearly growth rate of 2.8%. Although its operating margins are favorable compared to industry averages, the declining trend and negative earnings per share growth rate are concerning. Additionally, the company's negative PEG ratio further raises questions about its future growth prospects.
When considering value factors, Cognex is trading above its fair value with a high P/E ratio of 42.3 and a P/B ratio of 4.45. While the firm's free cash flows have been consistent, the negative growth rate and high variability coefficient are red flags. The elevated P/E ratio, combined with the forward P/E ratio consistent with historical averages, suggests that the stock may be overvalued.
It's important to note that this analysis is not personalized financial advice and should be considered alongside individual circumstances and further research.
