Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Cognex Corporation (NASDAQ: CGNX) is a provider of machine vision products that capture and analyze visual information to automate manufacturing and distribution tasks where vision is required. The Company offers a range of machine vision systems and sensors, vision software, and industrial image-based barcode readers designed to meet customer needs.

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~43.62% of the total shareholding. The Vanguard Group, Inc. and BlackRock Institutional Trust Company,N.A.  are holding the maximum stake in the company at ~8.98% and ~8.42%, respectively.

1.4 Key Metrics:

The company is having higher margin profile in Q1FY22  as compared to its competitors and constantly maintains better margins than peers as shown in the first graph. Moreover, the company has able to grow its free cash flows with a CAGR of 8.8%, which reflects strength of the business model to dominate competition, generate higher profitability margins and constantly throw free cash flows to fund future growth.

1.5 Relative Performance: CGNX vs Benchmark Index (NASDAQ Composite)

CGNX shares have reported relative outperformance over the benchmark NASDAQ Compposite Index. CGNX shares have surged ~170% between January 1^st, 2016 to December 31^st 2021, implies a CAGR of ~24%.

1.6 Dividend Profile

CGNX has consistent track record of dividend payment over the past 5-years. Morover, in the same time the company’s dividend has increased with a CAGR of 10.68%. At the last closing, CGNX shares are yielding 0.60%.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

2.2 Insights of Q1FY22:

Section 3: Key Risks and Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Note 3: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavorable movement in the stock prices.