Is Cognex Still a Growth Stock?

On a current P/E ratio of more than 53 time earnings, machine vision company Cognex Corporation (NASDAQ: CGNX) is certainly priced as a growth stock. However, the company's revenue and earnings growth has faltered in 2019 and analyst projections for 2020 put in on par with 2018. Are the stock's growth days over? And if so, does that mean the stock is massively overvalued right now?

The chart below shows Cognex's stuttering growth in the last year or so. To understand what's going on, you have to dig into how Cognex actually makes money. Alongside many other automation and robotics stocks Cognex has heavy exposure to capital spending trends in the automotive and consumer electronics industries. There's a perfectly rational reason for this; the automotive and electrical and electronics industries are the early adopters of automation and machine vision.

Image source: Getty Images.

Continue reading


Source Fool.com