CGNX - Embedded Expectations Analysis - 2021 07 07
Cognex Corporation (CGNX:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 44.6x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about maintaining record performance, logistics segment automation opportunities, and supply chain disruptions.Specifically, management may lack confidence in their ability to maintain their record quarterly performance, sustain logistics segment growth, and gain share in the 3D machine vision market. In addition, they may have concerns about supply chain disruptions and continued chip shortages in the automotive sector. Furthermore, management may be exaggerating the automation opportunities in the logistics market and the potential of Cognex Edge Intelligence. Finally, they may be concerned about the sustainability of e-commerce sector demand and the pace of recovery of manufacturing demand.
Cognex is a provider of machine vision products that capture and analyze visual information in order to automate manufacturing and distribution tasks where vision is required. Machine vision products are used to automate the manufacture and tracking of discrete items, such as mobile phones, aspirin bottles, and automobile tires, by locating, identifying, inspecting, and measuring them during the manufacturing or distribution process. The company provides a range of machine vision systems and sensors, vision software, and industrial image-based barcode readers. The company's products also have a variety of physical forms, depending upon the user's needs.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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