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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$41.02 and falling to the lows of US$30.01. 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$30.01 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.
Is Cognex Still Cheap?
According to our valuation model, Cognex seems to be fairly priced at around 20% below our intrinsic value, which means if you buy Cognex today, you’d be paying a fair price for it. And if you believe that the stock is really worth $37.41, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Cognex’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
View our latest analysis for Cognex
Can we expect growth from Cognex?
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. With profit expected to more than double over the next couple of years, the future seems bright for Cognex. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? CGNX’s optimistic future growth appears to have been factored into the current share price, 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 conviction to buy should the price fluctuates below the true 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 positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.