Cognex Corporation (CGNX) Marked As A Dead Cat Bounce Stock

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 Corporation ( CGNX) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Cognex Corporation 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 $33.3 million.
  • CGNX has traded 63,476 shares today.
  • CGNX is up 3% today.
  • CGNX was down 8.2% yesterday.

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More details on CGNX:

Cognex Corporation provides machine vision products that capture and analyze visual information 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 44.1. Currently there is 1 analyst that rates Cognex Corporation a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Cognex Corporation has been 552,000 shares per day over the past 30 days. Cognex has a market cap of $3.2 billion and is part of the technology sector and electronics industry. The stock has a beta of 1.37 and a short float of 2.8% with 2.35 days to cover. Shares are down 4.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cognex Corporation as a buy. 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, solid stock price performance 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 ratings report include:
  • CGNX's revenue growth has slightly outpaced the industry average of 4.8%. Since the same quarter one year prior, revenues rose by 13.4%. 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 5.25, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for COGNEX CORP is currently very high, coming in at 79.52%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.83% significantly outperformed against the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 89.55% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • COGNEX CORP has improved earnings per share by 12.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COGNEX CORP reported lower earnings of $0.78 versus $0.82 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.78).

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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