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Cognex Corp. (CGNX - Free Report) is a $7 billion designer and manufacturer of machine vision systems that are used to automate a wide range of manufacturing processes where vision is required. I last wrote about the company in late February after a 43% earnings beat and rising sales estimates got my attention.
Cognex machine vision systems consist of two primary elements: a computer, which serves as a machine vision engine, and software that processes and analyzes images.
When connected to a video camera, the machine vision system captures images and extracts information, which determines appropriate action for other equipment in the manufacturing process. The company has installed over 1 million machine vision systems.
Keeping an Eye on the Machines
Cognex solutions aid manufacturers across many industries from automotive parts and electronics to pharmaceuticals and food.
From the Cognex website, descriptions of two successful customer solutions...
Being one of the biggest constructors and suppliers of automotive parts, Borg Warner cannot afford to make mistakes. They needed to guarantee the quality of a new high added value component and to be able to trace the product from cradle to grave.
In the automotive industry, time is money and for Siemens VDO in Germany, the technical support from Cognex meant fast installation and no time wasting. The inspection solution was up and running very fast.
Industrial Automation: Vision System Watches Candy Packaging
And while we've all seen film of our food being processed and packaged on vast assembly lines, with occasional human inspectors, few of us have imagined that machines are now consistently doing the job with less error, and coffee breaks. From a 2016 article by Vision-Systems.com...
Food manufacturers must ensure that the correct number and types of products are properly packaged and sealed before they are boxed and shipped to their customers. In the production of small candy products, numerous types of products may be produced on a single packaging and sealing system.
After sealing, these products must be checked to ensure that only a single product is wrapped and sealed, that no broken or misshapen parts have been packaged and that no product is trapped in the formed seal.
An Expensive Inspector
Cognex is projected to realize 18.45% revenue growth in 2017, totaling $617 million. That doesn't exactly make the name a value trading at over 11X on a price-to-sales basis and 40X on the P/E multiple. But the higher valuation is probably accorded for its fast growth in the key tech field of machine vision and learning.
And the reason that CGNX is a Zacks #1 Rank again is because earnings estimates were significantly boosted after the company's last report. Full year 2017 EPS projections were raised nearly 10% from $1.75 to $1.92, representing 11.7% growth.
Maybe the higher valuations are being accorded to Cognex because this machine vision is considered pivotal to new industrial applications involving machine learning, AI, and robotics.
Intel (INTC - Free Report) certainly believes so when they just paid a very rich multiple for Mobileye (MBLY - Free Report) for the Israeli company's machine vision and learning technologies in automotive Advanced Driver Assistance Systems (ADAS).
I would keep CGNX on my watch list for any pullbacks into the low $70s.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>
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Bull of the Day: Cognex (CGNX)
Cognex Corp. (CGNX - Free Report) is a $7 billion designer and manufacturer of machine vision systems that are used to automate a wide range of manufacturing processes where vision is required. I last wrote about the company in late February after a 43% earnings beat and rising sales estimates got my attention.
Cognex machine vision systems consist of two primary elements: a computer, which serves as a machine vision engine, and software that processes and analyzes images.
When connected to a video camera, the machine vision system captures images and extracts information, which determines appropriate action for other equipment in the manufacturing process. The company has installed over 1 million machine vision systems.
Keeping an Eye on the Machines
Cognex solutions aid manufacturers across many industries from automotive parts and electronics to pharmaceuticals and food.
From the Cognex website, descriptions of two successful customer solutions...
Being one of the biggest constructors and suppliers of automotive parts, Borg Warner cannot afford to make mistakes. They needed to guarantee the quality of a new high added value component and to be able to trace the product from cradle to grave.
In the automotive industry, time is money and for Siemens VDO in Germany, the technical support from Cognex meant fast installation and no time wasting. The inspection solution was up and running very fast.
Industrial Automation: Vision System Watches Candy Packaging
And while we've all seen film of our food being processed and packaged on vast assembly lines, with occasional human inspectors, few of us have imagined that machines are now consistently doing the job with less error, and coffee breaks. From a 2016 article by Vision-Systems.com...
Food manufacturers must ensure that the correct number and types of products are properly packaged and sealed before they are boxed and shipped to their customers. In the production of small candy products, numerous types of products may be produced on a single packaging and sealing system.
After sealing, these products must be checked to ensure that only a single product is wrapped and sealed, that no broken or misshapen parts have been packaged and that no product is trapped in the formed seal.
An Expensive Inspector
Cognex is projected to realize 18.45% revenue growth in 2017, totaling $617 million. That doesn't exactly make the name a value trading at over 11X on a price-to-sales basis and 40X on the P/E multiple. But the higher valuation is probably accorded for its fast growth in the key tech field of machine vision and learning.
And the reason that CGNX is a Zacks #1 Rank again is because earnings estimates were significantly boosted after the company's last report. Full year 2017 EPS projections were raised nearly 10% from $1.75 to $1.92, representing 11.7% growth.
2018 proft estimates went up 5% from $2.19 to $2.30 for a 19.7% projected advance. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Maybe the higher valuations are being accorded to Cognex because this machine vision is considered pivotal to new industrial applications involving machine learning, AI, and robotics.
Intel (INTC - Free Report) certainly believes so when they just paid a very rich multiple for Mobileye (MBLY - Free Report) for the Israeli company's machine vision and learning technologies in automotive Advanced Driver Assistance Systems (ADAS).
I would keep CGNX on my watch list for any pullbacks into the low $70s.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>