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Cognex Corporation (NASDAQ:CGNX): Should The Future Outlook Worry You?

Simply Wall St

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After Cognex Corporation's (NASDAQ:CGNX) recent earnings announcement in March 2019, analyst forecasts seem bearish, with earnings expected to decline by 11% in the upcoming year against the past 5-year average growth rate of 18%. Currently with a trailing-twelve-month profit of US$219m, the consensus growth rate suggests that earnings will drop to US$195m by 2020. Below is a brief commentary around Cognex's earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for Cognex

How will Cognex perform in the near future?

Over the next three years, it seems the consensus view of the 15 analysts covering CGNX is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of CGNX's earnings growth over these next few years.

NasdaqGS:CGNX Past and Future Earnings, June 12th 2019

This results in an annual growth rate of 21% based on the most recent earnings level of US$219m to the final forecast of US$332m by 2022. This leads to an EPS of $1.61 in the final year of projections relative to the current EPS of $1.27. In 2022, CGNX's profit margin will have expanded from 27% to 29%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Cognex, there are three key factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Cognex worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Cognex is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cognex? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.