Cognex Corporation (CGNX): what the price requires

At today's price, Cognex Corporation (CGNX) is priced for today's economics sustained for ~16.0 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/CGNX

Headline

FieldValue
TickerCGNX
CompanyCognex Corporation
Current price$63.78/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed50.7%
Operating margin today18.5%
Margin expansion implied+32.2pp
Must persist for16.0y
Multiple paid56x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 11.6% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.4 years.

Reconcile: at the x-ray's 9.3% required return this reads ~10.7 years; the models below use their own rates.

How unusual the bet is: high

ReferenceValue
vs own history+0.48σ
cohort percentile (of 178 peers)85
sustained it ~10 years at this level14%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset6.82x4expensive
Earnings5.69x5expensive
Relative2.68x5expensive
Growth1.04x3expensive

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$40.811.56xyesFCF base $0.3B, growth 14% (input: historical growth), terminal g 4.0%, WACC 9.1%, 6yr projection
DCF Exit MultipleGrowth$71.710.89xyesExit EV/EBITDA: 52.3x / 54.3x / 56.3x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$31.292.04xyesP/E 35.2x (blended: static sector reference 18x + trailing (TTM) 75x), scenarios: 28.9x / 35.2x / 41.5x (bear / base = reference held flat / bull), EV/EBITDA 24.68x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$9.156.97xyesBV/sh $8.78, ROE (TTM) 9.6%, ke 9.3%
Two-Stage Excess ReturnAsset$9.346.83xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$61.521.04xyesRev $1.0B, growth 14% (input: historical growth; tapered), Terminal P/S: 8.4x / 10.3x / 12.1x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$23.842.68xyesEPS $0.85, growth 28% (input: historical EPS growth), PEG=2.69 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$8.477.53xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.17B × (1−16%) / WACC 9.1% → EPV (no growth)
Residual IncomeAsset$9.376.81xyesBV $8.78 + 5yr PV of (ROE (TTM) 9.6% − Kₑ 9.3%) × BV; BV grows 6.3%/yr
Graham NumberAsset$12.964.92xyes√(22.5 × EPS $0.85 × BVPS $8.78) — Graham's conservative floor
EV/EBITDA RelativeRelative$13.304.80xyesEBITDA $0.20B × sector EV/EBITDA 12.0x
FCF YieldEarnings$14.454.41xyesFCF $241.1M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$11.205.69xyesSBC-adj FCF $0.19B (FCF $0.24B − SBC $0.05B) capitalized at Kₑ
Ben Graham FormulaEarnings$27.432.33xyesEPS $0.85 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$2.9421.69xyesBV $8.78 × (ROIC 3.0% / WACC 9.1%) (excluded from median)
P/Sales SectorRelative$15.544.10xyesRevenue $1.05B × sector P/S 2.5x
PEG Fair ValueRelative$31.882.00xyesEPS $0.85 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$9.196.94xyesEPS $0.85 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net cash$296.8m
Net debt / NOPAT (after-tax)-1.89x (net cash)
Net debt / operating income (pre-tax)-1.59x (net cash)
Share count CAGR (buyback)-1.2%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

At $66.15 (June 27, 2026) the price pays about 58x company-wide operating income, which the model reads as a bet that operating growth holds near its self-funding ceiling for roughly 17 years. That looks extreme until you note the denominator: trailing operating margin of 18.8% is depressed by a recently weak industrial cycle that is now turning.

The recovery is well underway. Q1 2026 revenue rose 24% year over year, operating margin reached 22.3%, and adjusted EBITDA margin expanded over 1,000 basis points to 26.9%, the seventh straight quarter of margin improvement, with adjusted EPS up 113%.

The bet is on a debt-free machine-vision leader (net cash near $297 million) compounding through the automation cycle. The risk is paying 58x at the early innings of a recovery that may not run as long or as far as the price assumes.

Bull Case

What the standard valuation methods miss about Cognex is that they are reading a trough margin as if it were the steady state. The static frames capitalize an 18.8% trailing operating margin, but that figure is the residue of a multi-year industrial downturn, and the business is structurally a far higher-margin franchise. The proof is in the recovery: Q1 2026 operating margin reached 22.3% and adjusted EBITDA margin hit 26.9%, expanding more than 1,000 basis points year over year in the seventh consecutive quarter of margin improvement. Revenue grew 24%, and adjusted EPS jumped 113%. A method that values Cognex on last year's depressed earnings is structurally too low for a company whose margins are climbing back toward their historical mid-to-high-20s level, which is exactly why only the forward-growth methods reach the price.

The franchise underneath is a genuine technology leader, and the 10-K makes the breadth clear: Cognex is 'a global technology leader in industrial machine vision systems' whose products serve 'a diverse set of industrial end markets,' with the company noting that 'virtually every manufacturer or logistics provider can achieve better' outcomes with machine vision (FY2025 10-K, accession 0000851205-26-000012). The demand drivers are secular. The filing points to growth in packaging 'driven by increasingly stringent regulations around traceability, quality, and compliance,' and the broader thesis is that automation, labor scarcity, and quality requirements push machine vision into more of the production and distribution chain over time. Q1's strength was broad-based across semiconductor, electronics, packaging, and logistics, with semiconductor notably strong in Asia.

The balance sheet and capital allocation complete the case. Cognex carries roughly $297 million of net cash with no debt, so it funds its own R&D and growth and can buy back stock opportunistically, which it did to the tune of $113 million in Q1. Guidance for Q2 2026 implies revenue of $280 to $300 million and adjusted EPS of $0.40 to $0.44, both well above the prior year, signaling the recovery has momentum rather than being a one-quarter pop. For a buyer who believes machine vision is early in a long automation adoption curve and that Cognex's margins are normalizing upward, the elevated multiple is the price of a high-quality, debt-free compounder whose reported earnings have not yet caught up to its earning power.

Bear Case

The cleanest way into the bear case is the disagreement among the valuation methods, because it maps directly onto the central uncertainty. The static methods, those that value Cognex on its current and asset-based reality, all land far below the price: Earnings Power Value near $9, the excess-return and residual-income methods near $9, the Graham Number near $13, EV/EBITDA-relative near $13, FCF yield near $14. The forward-growth methods, which extrapolate the recovery, are the only ones that reach the quote: the perpetual-growth DCF near $45, the discounted-future-market-cap near $70, the exit-multiple DCF near $81. The conservative methods are not broken; they are honestly pricing the business on what it earns today. When the entire bull case depends on the optimistic, extrapolating methods being right and the conservative ones being wrong, the more honest read is usually the conservative one, and here it sits at less than half the price.

The reason the conservative methods deserve weight is that Cognex is cyclical, and cyclicals are dangerous to buy at high multiples during a recovery. The current margin expansion is real, but it is coming off a deep trough, which mechanically produces spectacular year-over-year growth rates that cannot persist. Adjusted EPS up 113% is a recovery-math artifact: once the comparison base normalizes, the growth rate falls sharply. The price assumes growth holds near the self-funding ceiling for roughly 17 years, and historically only about 14% of comparable fast-growers sustained that pace for even a decade. Paying 58x trailing operating income at the early stage of a cyclical upswing is the textbook way to overpay, because the multiple looks reasonable on the recovered earnings the market is anticipating and absurd if the recovery stalls.

The third risk is competition and end-market concentration. Machine vision is increasingly contested as general-purpose AI and lower-cost vision systems encroach on what was once specialized hardware-and-software territory. Cognex faces both traditional competitors and the broader trend of AI-based vision becoming commoditized, which could pressure the high margins the bull case requires. Its end markets, semiconductor, electronics, automotive, and logistics, are themselves cyclical and capital-spending-driven, so a slowdown in any of them (a semiconductor capex pause, a logistics-automation digestion period) would hit revenue directly. At a price built on a long, smooth recovery at high margins, the bear case is simply that industrial cycles are neither long nor smooth, and the conservative methods near $28 are pricing that reality.

Valuation

Cognex is a cyclical at the early stage of a recovery, which makes the valuation a question of which earnings base is right. At about 58x company-wide operating income the price inverts to growth held near the self-funding ceiling for roughly 17 years, computed at an 11.8% cost of capital, with each point of cost of capital moving the implied horizon by about 2.5 years. The model labels this elevated, and the multiple looks extreme largely because the trailing 18.8% operating margin is depressed by the recent industrial downturn rather than representative of the franchise.

The method families disagree sharply, and the disagreement is the whole analysis. The static frames, which value the business on current and book reality, cluster low: Earnings Power Value near $9, the excess-return and residual-income methods near $9, the Graham Number near $13, FCF yield near $14, P/Sales near $16. The forward-growth methods, which extrapolate the recovery, reach the price: perpetual-growth DCF near $45, discounted-future-market-cap near $70, exit-multiple DCF near $81. The honest synthesis is that neither extreme is the answer. The static methods understate a business whose margins are demonstrably climbing back toward the high-20s (Q1 2026 adjusted EBITDA margin was 26.9%), so $28 is too pessimistic. But the forward methods assume the recovery runs long and smooth, which the cyclicality argues against, so the $45 to $81 range is too optimistic if the upswing fades.

Catalysts

The Q1 2026 report was the recent catalyst and it was strong across the board. Revenue rose 24% year over year (21% constant currency) to $268.4 million on broad-based demand led by semiconductor, electronics, packaging, and logistics, with semiconductor notably strong in Asia. Operating margin reached 22.3% and adjusted EBITDA margin expanded over 1,000 basis points to 26.9%, the seventh consecutive quarter of margin improvement, while adjusted EPS of $0.34 beat by 36% and grew 113%. Q2 2026 guidance implies revenue of $280 to $300 million and adjusted EPS of $0.40 to $0.44. The next prints are the key test of whether the margin recovery continues toward the historical peak and whether revenue growth holds as the year-over-year comparisons get harder.

The forward watch items center on the industrial and automation cycle. Demand in semiconductor, electronics, automotive, and logistics drives revenue, so capital-spending trends in those end markets are the macro variables that matter, with the semiconductor cycle in Asia a particular swing factor. On the company side, continued margin expansion, new product adoption (including AI-enabled and edge-vision offerings), and the pace of opportunistic buybacks against the net-cash balance sheet are the levers. The competitive watch item is whether lower-cost or AI-based vision systems pressure Cognex's pricing and margins over time. For a stock priced for a long, durable recovery, the catalysts that sustain it are continued double-digit growth, margin normalization toward the high-20s, and evidence that the automation adoption curve has years left.

Sources: Cognex Q1 2026 results, 24% revenue growth (StockTitan), Cognex reports Q1 2026 results (PRNewswire), Cognex Q1 2026 earnings recap (AllInvestView), Cognex FY2025 10-K.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive CGNX report on boothcheck