Cognex (CGNX) Stock: Weak On High Volume Today - TheStreet

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified

Cognex

(

CGNX

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Cognex as such a stock due to the following factors:

  • CGNX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $20.2 million.
  • CGNX has traded 94,009 shares today.
  • CGNX is trading at 3.99 times the normal volume for the stock at this time of day.
  • CGNX is trading at a new low 5.05% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on CGNX:

Cognex Corporation provides machine vision products that capture and analyze visual information in order to automate tasks primarily in manufacturing processes. It operates in two divisions, Modular Vision Systems and Surface Inspection Systems. CGNX has a PE ratio of 40.1. Currently there are 2 analysts that rate Cognex a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Cognex has been 733,000 shares per day over the past 30 days. Cognex has a market cap of $3.3 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.23 and a short float of 3.9% with 5.92 days to cover. Shares are up 0.8% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Cognex as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 3.5%. Since the same quarter one year prior, revenues rose by 25.8%. 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 2.61, which clearly demonstrates the ability to cover short-term cash needs.
  • COGNEX CORP reported significant earnings per share improvement 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 ($1.33 versus $0.83).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electronic Equipment, Instruments & Components industry. The net income increased by 54.3% when compared to the same quarter one year prior, rising from $16.82 million to $25.95 million.
  • The gross profit margin for COGNEX CORP is currently very high, coming in at 79.03%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.84% significantly outperformed against the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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