I’m not going to sugarcoat this: Machine vision company Cognex(NASDAQ: CGNX) It goes to a hard year and there is a substantial risk that management does not have great news for investors when it obtains its earliest earnings on April 30. On the other hand, the action seems an excellent value for long -term investors seeking a growth stock to buy and maintain for the next decades. Here is why.
The company manufactures machines and reading codes reading technology. In a way, they are the eyes and more and more the brain of automated equipment. As manufacturing and logistics companies continue to invest in automated and logistics production lines, machine vision demand will increase.
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In addition, it is not only to generate productivity by replacing work in terms of inspecting, identifying, controlling and guiding the lines of production and logistics precisely, but the reality is that their machine vision solutions can do better than humans. In addition, this skill is increasingly improving artificial intelligence learning tools that facilitate configuration and the possibility of more complex tasks.
For an example of its technology, consider a smartphone manufacturer like Apple (Previously cited as a significant client) when you have to control quality control or guide the automated processes accurately. In the same way, there is a battery of electric vehicles (EV), another key market for Cognex, for which the accurate management of automated processes is essential for production lines and centers of compliance with e -commerce, where automation is essential.
Image Source: Getty’s pictures.
I mentioned the three Cognex Cognex markets: consumer electronics, automotive and logistics. (The company also sells several medical and factory automation customers.) In general, management sees its final markets grow at 13% per year, with the growth of the company that exceeds the growth of 15% of the industry.
The company has previously achieved and deepened this rate, but in recent years they have been difficult, to say less.
In a nutshell, the three final markets faced significant challenges. First, in logistics, demand increased after the locks, as many companies accelerated their e -commerce investment plans, only to have a strong retraction in recent years due to a natural correction of Hypergrowth previous.
Secondly, relatively high interest rates have reduced cars sales and there has been a strong slowdown in EV -related expense, partly because automobile manufacturers accelerated their EV plans during pandemic. Third, high interest rates also press the discretionary spending of consumer consumers and smartphone designers have remained when launching new models and making capital investments on production lines.
Launch the current uncertainty around the fare conflict and it is possible that Cognex will disappoint with its commercial update on April 30. This is a key date of the year, because Cognex tends to gain important orders in the spring while customers are preparing to prepare for the fourth quarter production.
In fact, Wall Street analysts have reduced the company’s expectations for the last two months.
Image Source: Getty’s pictures.
Although the configuration in the results is not excellent, Cognex is still very attractive. Their final markets will not be in Limbo forever, and the vision of machines is one of the answers to the question of how the United States and other higher cost work countries can re-industrialize and return to the manufacture of low-cost countries. The following graph shows that his assessment of an end of 12 months is favorable historically when comparing the free cash flow; earnings before interest, taxation, depreciation and depreciation (Ebitda) for business value (More Net Debt More Mercat); or price to sales.
In addition, consider that, if Wall Street is right, these valuations are based on income and cash flow, as the company is likely to bounce the bottom by 2025 and its long -term growth rate makes it look like an excellent growth stock at a reasonable price.
Prudent investors may want to wait for the results report and perhaps get a better entry point. However, if volatility can be stomach, cognex is an excellent stock for long -term investors.
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Lee the sams It has no position in any of the stocks mentioned. The Motley Fool has positions and Apple and Cognex recommends. The mold’s fool has a Outreach policy.
