While Cognex Corporation (NASDAQ:CGNX) might not have the largest market cap around , it saw significant share price movement during recent months on the NASDAQGS, rising to highs of US$52.91 and falling to the lows of US$36.85. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Cognex's current trading price of US$38.96 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let's take a look at Cognex's outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What Is Cognex Worth?
According to our valuation model, Cognex seems to be fairly priced at around 8.39% above our intrinsic value, which means if you buy Cognex today, you'd be paying a relatively fair price for it. And if you believe the company's true value is $35.94, then there isn't really any room for the share price grow beyond what it's currently trading. Although, there may be an opportunity to buy in the future. This is because Cognex's beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will Cognex generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Cognex's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? It seems like the market has already priced in CGNX's positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you've been keeping an eye on CGNX, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you'd like to know more about Cognex as a business, it's important to be aware of any risks it's facing. For example - Cognex has 1 warning sign we think you should be aware of.
If you are no longer interested in Cognex, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.