Cognex Corporation (CGNX) DCF Valuation & Fundamental Primer
Cognex Corporation (CGNX) currently trades at $37.37 with an enterprise value of $10.24B. Our proprietary institutional model rates Cognex Corporation at 88/100 (Grade: A+ · Elite SaaS Compounder). The current market price prices in an implied 5-year revenue CAGR of 5.4% vs. historical growth of 19.6% (Substantial Margin of Safety).
Institutional fundamental teardown of Cognex Corporation (CGNX) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Cognex Corporation (CGNX) 3-Scenario DCF Valuation Range
Stress-test CGNX's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $37.37).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $70.88 +90% | $75.23 +101% | $80.31 +115% | $86.31 +131% | $93.50 +150% |
| 9.3% | $63.81 +71% | $67.24 +80% | $71.18 +90% | $75.74 +103% | $81.10 +117% |
| 10.0% | $58.00 +55% | $60.76 +63% | $63.88 +71% | $67.45 +80% | $71.57 +92% |
| 10.8% | $53.15 +42% | $55.40 +48% | $57.93 +55% | $60.78 +63% | $64.03 +71% |
| 11.5% | $49.03 +31% | $50.90 +36% | $52.98 +42% | $55.30 +48% | $57.91 +55% |
Institutional Software Quality Scorecard (88/100 · Grade A+)
Exceptional unit economics, disciplined equity dilution, and fortress balance sheet.
Elite deferred revenue float; FCF exceeds operating income by >20%
Standard software SBC dilution; modest equity transfer to employees
Elite Tier-1 SaaS compounder with high gross margin and superior Rule of 40
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 204% of EBIT driven by upfront annual collections
- Top-quartile software unit economics: 79.5% gross margin and 49.6% Rule of 40 score
- Net cash positive: $471.0M balance sheet buffer
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into CGNX?
The current share price only requires 5.4% 5-year CAGR (14.7% dilution-adjusted), well below historical growth of 19.6%. If the company maintains baseline execution, there is asymmetric upside.
Headline Reverse-DCF ignores Stock-Based Compensation (14.8% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 14.7% 5-year revenue CAGR to justify $37.37/sh on a true per-share economic cash flow basis.
Cognex Corporation (CGNX) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $1.25B | $1.25B | $1.50B | $1.79B | $2.14B | $2.56B | $3.07B |
| Gross Profit | $995.8M | $995.8M | $1.19B | $1.42B | $1.70B | $2.04B | $2.44B |
| Operating Income (EBIT) | $184.1M | $184.1M | $220.2M | $263.4M | $315.0M | $376.8M | $450.6M |
| Stock-Based Compensation (SBC) | $185.4M | $185.4M | $221.7M | $265.2M | $317.2M | $379.3M | $453.7M |
| Unlevered Free Cash Flow (FCF) | $375.8M | $375.8M | $449.4M | $537.5M | $642.9M | $768.9M | $919.6M |
| SBC-Adjusted True Cash Flow | $190.4M | $190.4M | $227.7M | $272.4M | $325.7M | $389.6M | $465.9M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -33.2 + 0.86 × (Rule of 40) · R² = 71%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Cognex Corporation | CGNX | $6.26B | $1.25B | 79.5% | 30.0% | 49.6% | 14.8% | 4.6× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 4.6× | $5.79B | $6.26B | $37.37 | 0.0% |
| -20% Multiple Compression | 3.7× | $4.63B | $5.10B | $30.46 | -20.0% |
| -35% Multiple Compression | 3.0× | $3.76B | $4.24B | $25.27 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $6.26B | $6.73B | $40.18 | +8.1% |
Frequently Asked Questions: Cognex Corporation (CGNX) Valuation
What is Cognex Corporation (CGNX)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Cognex Corporation (CGNX) has a Base Case implied value of $63.88 per share (with a Bear Case of $29.40 and a Bull Case of $111.50), compared to its current price of $37.37. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Cognex Corporation (CGNX)'s Rule of 40 score and Free Cash Flow margin?
Cognex Corporation achieves a Rule of 40 score of 49.6%, combining a 19.6% revenue growth run-rate with a 30.0% TTM free cash flow margin on $1.25B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into CGNX stock according to Reverse-DCF analysis?
At $37.37 per share (Enterprise Value of $5.79B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 5.4%, compared to Cognex Corporation's historical CAGR of 19.6%. Overall market expectations are rated as "Substantial Margin of Safety".
How does Cognex Corporation compare to Software & Cloud Services software peers?
Cognex Corporation (CGNX) earns an institutional Software Quality Score of 88/100 (Grade A+ — Elite SaaS Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Cognex Corporation (CGNX)'s valuation?
Cognex Corporation recorded $185.4M in TTM stock-based compensation (14.8% of revenue). When treating SBC as a cash-equivalent compensation expense, Cognex Corporation's SBC-adjusted free cash flow yield is 3.0%, scoring 16/25 on our Shareholder Dilution Friction pillar.