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Why Cognex Corporation (CGNX) Stock Is Gaining Today

NEW YORK (TheStreet) -- Cognex Corporation (CGNX) stock is gaining Wednesday after announcing it had received record orders from a single customer. 

By midafternoon, shares had added 3.1% to $35.10.

The industrial technology developer said it had received two orders with combined value of more than $40 million from an undisclosed manufacturer in Asia. The company said it expects revenue from these purchase orders to be recognized in the third quarter ending September. 

"These orders represent the largest amount that we have ever received from a single customer in a single quarter in the 33-year history of our company," said Cognex chairman Dr. Robert J. Shillman in a statement

"Cognex won this project after a lengthy, rigorous qualification process involving a number of our competitors," added CEO Robert J. Willett.

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TheStreet Ratings team rates COGNEX CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate COGNEX CORP (CGNX) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 1.6%. Since the same quarter one year prior, revenues rose by 16.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CGNX has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 4.56, which clearly demonstrates the ability to cover short-term cash needs.
  • COGNEX CORP has improved earnings per share by 24.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COGNEX CORP increased its bottom line by earning $0.83 versus $0.78 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.83).
  • The gross profit margin for COGNEX CORP is currently very high, coming in at 79.80%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.36% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $36.22 million or 37.60% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.51%.
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