Cognex Corporation reports 24.1% Net Income growth in 2018 while 5.9 pp EBITDA Margin decline from 36.0% to 30.1%
02/14/2019 • About Cognex Corporation (
$CGNX) • By InTwits
Cognex Corporation reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Cognex Corporation is a growth stock: 2018 revenue growth was 5.3%, 5 year revenue CAGR was 17.9% at 2018 ROIC 20.1%
- Cognex Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.9%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $37m in 2018, $29m in 2017, $13m in 2016, $18m in 2015, $21m in 2014
- The company has highly profitable business model: ROIC is 20.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Cognex Corporation's Revenue increased on 5.3%. Revenue growth showed acceleration in 18Q4 - it increased 5.7% YoY. Revenue growth was financed by EBITDA margin decline. EBITDA Margin decreased on 5.9 pp from 36.0% to 30.1% in 2018.
Gross Margin decreased slightly on 1.1 pp from 75.6% to 74.4% in 2018. Gross Margin declined at -0.87 pp per annum in 2014-2018. SG&A as a % of Revenue increased on 3.8 pp from 28.8% to 32.6% in 2018. During 2014-2018 SG&A as a % of Revenue bottomed in 2017 at 28.8%. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 0.93 pp from 4.2% to 5.1% in 2018.
Net Income margin increased on 4.1 pp from 23.1% to 27.2% in 2018. The efficient tax rate was 6.5% in 2018 while the average for the last five years was 16.2%.
Investments (CAPEX, working capital and M&A)
In 2018 Cognex Corporation had CAPEX/Revenue of 4.6%. The company's CAPEX/Revenue increased slightly on 0.55 pp from 4.0% in 2015 to 4.6% in 2018. For the last three years the average CAPEX/Revenue was 3.6%. During 2014-2018 CAPEX as a % of Revenue bottomed in 2016 at 2.4% and was growing since that time.
Accounts receivable as a % of Revenue decreased slightly on 0.80 pp from 15.6% to 14.8% in 2018. Inventories as a % of Revenue increased slightly on 1.5 pp from 8.9% to 10.3% in 2018. Accounts payable as a % of Revenue decreased on 4.7 pp from 12.5% to 7.9% in 2018.
Cognex Corporation has spent
$4m on M&A in 2018 which accounts for 0.53% of revenue.
Return on investment
The company operates at high and attractive ROIC (20.1%) while ROE is a bit lower (19.7%). ROIC decreased on 5.5 pp from 25.6% to 20.1% in 2018. ROE increased on 2.5 pp from 17.2% to 19.7% in 2018.
Leverage (Debt)
The company has no debt. Cash increased slightly on 1.5%.
Valuation and dividends
Cognex Corporation's trades at EV/EBITDA 35.4x and P/E 39.7x.
The company paid 14.6% of Net Income as dividends in 2018.
Management team
Cognex Corporation's CEO is Robert Jolyon Willett "Rob". Robert Jolyon Willett "Rob" is a founder and has 8 years tenure with the company. CEO total compensation was
$2,562,093 in 2018 which included
$376,442 salary.
The company has 4.7% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 2,124 employees. The number of employees surged on 19.9%. Average revenue per employee in 2018 was
$379,632 and it dropped on 12.2%.
Financial and operational results
FY ended 12/31/2018
Cognex Corporation ($CGNX) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 426.4 | 450.6 | 529.5 | 766.1 | 806.3 | 5.3% |
| Gross Profit | 332.4 | 348.0 | 398.4 | 578.8 | 600.3 | 3.7% |
| SG&A | 148.7 | 156.7 | 166.1 | 220.7 | 262.7 | 19.0% |
| EBITDA | 140.3 | 135.6 | 169.1 | 275.9 | 242.7 | -12.0% |
| EBIT | 127.9 | 121.5 | 154.1 | 258.9 | 221.1 | -14.6% |
| Tax | 20.9 | 19.3 | 18.1 | 89.8 | 15.3 | -82.9% |
| Net Income | 121.5 | 187.1 | 143.7 | 176.7 | 219.3 | 24.1% |
| Stock Based Compensation | 7.3 | 20.2 | 20.6 | 31.9 | 41.1 | 28.6% |
Balance Sheet
|
|---|
| Cash | 55.7 | 52.0 | 79.6 | 106.6 | 108.2 | 1.5% |
| Accounts Receivable | 40.1 | 42.8 | 55.4 | 119.4 | 119.2 | -0.2% |
| Inventory | 29.2 | 37.3 | 27.0 | 67.9 | 83.3 | 22.6% |
| Accounts Payable | 17.2 | 7.9 | 9.8 | 23.5 | 16.2 | -30.8% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 20.9 | 18.2 | 12.8 | 28.8 | 37.1 | 29.0% |
| Dividends | | 18.0 | 25.0 | 29.0 | 32.0 | 10.3% |
| Acquisitions | | 1.0 | 14.3 | 24.1 | 4.3 | -82.3% |
Ratios
|
|---|
| Revenue growth | 20.5% | 5.7% | 17.5% | 44.7% | 5.3% | |
| EBITDA growth | 44.0% | -3.3% | 24.7% | 63.1% | -12.0% | |
|
|---|
| Gross Margin | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% | -1.1% |
| EBITDA Margin | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% | -5.9% |
| EBIT Margin | 30.0% | 27.0% | 29.1% | 33.8% | 27.4% | -6.4% |
| SG&A, % of revenue | 34.9% | 34.8% | 31.4% | 28.8% | 32.6% | 3.8% |
| SBC, % of revenue | 1.7% | 4.5% | 3.9% | 4.2% | 5.1% | 0.9% |
| Net Income Margin | 28.5% | 41.5% | 27.1% | 23.1% | 27.2% | 4.1% |
| CAPEX, % of revenue | 4.9% | 4.0% | 2.4% | 3.8% | 4.6% | 0.8% |
|
|---|
| ROIC | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% | -5.5% |
| ROE | 17.6% | 24.0% | 16.1% | 17.2% | 19.7% | 2.5% |
| Net Debt/EBITDA | -0.4x | -0.4x | -0.5x | -0.4x | -0.4x | -0.1x |
People
|
|---|
| Insider ownership | 4.7% | 4.7% | 4.7% | 4.7% | 4.7% | 0.0% |
| Employees | 1,322 | 1,305 | 1,421 | 1,771 | 2,124 | 19.9% |
| Revenue/Employee, th. $ | 323 | 345 | 373 | 433 | 380 | -12.2% |
Cognex Corporation ($CGNX) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 170 | 211 | 232 | 193 | | 22.0% | 18.6% | -12.7% | 5.7% |
| EBITDA | 40 | 69 | 83 | 51 | | -3.3% | 7.1% | -27.7% | -7.9% |
| Net Income | 37 | 56 | 80 | 45 | | -18.2% | -0.5% | -21.5% | |
Balance Sheet
|
|---|
| Cash | 110 | 129 | 107 | 108 | | 18.5% | 89.3% | -3.6% | 1.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 76.3% | 74.4% | 74.7% | 72.7% | | -0.3% | -2.0% | 0.2% | -3.0% |
| EBITDA Margin | 23.5% | 32.5% | 35.8% | 26.4% | | -6.1% | -3.5% | -7.5% | -3.9% |
| Net Income Margin | 21.9% | 26.6% | 34.6% | 23.5% | | -10.8% | -5.1% | -3.9% | 38.7% |
Peers in Electronic Equipment & Instrum
Below we provide Cognex Corporation benchmarking against other companies in Electronic Equipment & Instrum industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Hickok Inc ($HICKA) | | -7.2% | 13.5% | 258.4% | 178.7% |
| Electro Scientific Industries, Inc. ($ESIO) | | -12.2% | 15.9% | -12.7% | 128.5% |
| Microvision, Inc. ($MVIS) | | 163.6% | 60.7% | -34.7% | 82.8% |
| Ipsidy Inc ($IDTY) | | | | | 66.2% |
| Magal Security Systems Ltd. ($MAGS) | | -17.8% | 6.4% | -5.2% | 44.0% |
| |
|---|
| Median (61 companies) | -78.5% | 3.5% | 0.3% | 3.6% | 10.4% |
|---|
| Cognex Corporation ($CGNX) | | 5.7% | 17.5% | 44.7% | 5.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Intellicheck, Inc. ($IDN) | 58.2% | 57.1% | 80.0% | 85.5% | 91.3% |
| Image Sensing Systems, Inc. ($ISNS) | 74.7% | 77.1% | 71.0% | 79.9% | 80.9% |
| National Instruments Corporation ($NATI) | 74.4% | 74.1% | 74.5% | 74.5% | 75.4% |
| Applied DNA Sciences Inc ($APDN) | | | 82.2% | 77.3% | 69.1% |
| Ipsidy Inc ($IDTY) | | | | 74.4% | 67.2% |
| |
|---|
| Median (60 companies) | 41.7% | 41.8% | 40.1% | 41.5% | 40.9% |
|---|
| Cognex Corporation ($CGNX) | 77.9% | 77.2% | 75.2% | 75.6% | 74.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Coherent, Inc. ($COHR) | 14.2% | 16.7% | 18.9% | 24.9% | 26.6% |
| Hollysys Automation Technologies, Ltd. ($HOLI) | 21.3% | 26.9% | 23.5% | 16.1% | 23.9% |
| Electro Scientific Industries, Inc. ($ESIO) | -10.1% | -19.1% | -2.0% | -17.8% | 23.1% |
| FLIR Systems, Inc. ($FLIR) | 20.7% | 22.8% | 21.3% | 20.0% | 21.7% |
| Badger Meter, Inc. ($BMI) | 16.9% | 16.7% | 18.6% | 20.1% | 18.7% |
| |
|---|
| Median (60 companies) | 5.3% | 3.9% | 3.0% | 3.0% | 3.3% |
|---|
| Cognex Corporation ($CGNX) | 32.9% | 30.1% | 31.9% | 36.0% | 30.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Wrap Technologies Inc ($WRTC) | | | | | 61.4% |
| ClearSign Combustion Corporation ($CLIR) | | 80.3% | 22.1% | 17.4% | 17.7% |
| LightPath Technologies, Inc. ($LPTH) | 16.8% | 5.0% | 6.5% | 7.8% | 7.7% |
| Giga-tronics Inc ($GIGA) | 1.7% | 0.1% | 1.3% | 0.3% | 7.0% |
| Applied DNA Sciences Inc ($APDN) | 8.4% | 3.9% | 16.1% | 3.1% | 6.8% |
| |
|---|
| Median (60 companies) | 1.8% | 1.9% | 2.1% | 1.6% | 2.2% |
|---|
| Cognex Corporation ($CGNX) | 4.9% | 4.0% | 2.4% | 3.8% | 4.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Evans & Sutherland Computer Corp ($ESCC) | | | 83.3% | 39.6% | 55.3% |
| Electro Scientific Industries, Inc. ($ESIO) | -11.7% | -19.7% | -7.1% | -22.9% | 31.5% |
| Coherent, Inc. ($COHR) | 9.9% | 13.1% | 15.6% | 24.0% | 21.5% |
| Zebra Technologies Corporation ($ZBRA) | 3.3% | 0.9% | 2.2% | 10.2% | 20.8% |
| Image Sensing Systems, Inc. ($ISNS) | -16.5% | 5.3% | 11.7% | 28.6% | 18.5% |
| |
|---|
| Median (72 companies) | 3.3% | 1.8% | 1.8% | 1.8% | 0.9% |
|---|
| Cognex Corporation ($CGNX) | 18.3% | 15.6% | 17.7% | 25.6% | 20.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Itron, Inc. ($ITRI) | 2.1x | 1.9x | 1.0x | 2.0x | 12.3x |
| Track Group Inc ($TRCK) | | | | | 12.2x |
| Mesa Laboratories, Inc. ($MLAB) | 0.7x | 1.1x | 1.7x | 2.0x | 3.5x |
| Trimble Inc. ($TRMB) | 1.3x | 1.7x | 1.1x | 1.3x | 3.4x |
| MTS Systems Corporation ($MTSC) | -0.0x | -0.4x | 5.8x | 3.9x | 3.2x |
| |
|---|
| Median (35 companies) | -0.8x | -0.9x | -0.9x | -0.8x | -0.9x |
|---|
| Cognex Corporation ($CGNX) | -0.4x | -0.4x | -0.5x | -0.4x | -0.4x |
