Cognex Corporation (NASDAQ:CGNX) provides vision systems, software and sensors and surface inspection systems used in manufacturing automation. Cognex is a high-growth company with a solid balance sheet (no long-term debt) and high margins, however, there has been some sputtering recently. The industry is highly fragmented with high margins that are ripe for competition. My thesis is that Cognex is overvalued based on my research and DCF model. With that said, a pullback (due to a market dislocation) and continued solid operating results may present a great buying opportunity in an innovative company in a growing industry.
Cognex's machine vision products can track, locate and identify discrete items within a manufacturing environment. Sales are predominantly to factory automation customers (95% of FY15 revenue) that incorporate the product into their process. Customers in the semiconductor and electronics capital equipment market represented 5% of FY15 sales.
