What's in Store for Cognex (CGNX) This Earnings Season?

Cognex Corporation CGNX is set to report third-quarter 2020 results on Oct 28.

During its last earnings release, the company had issued a wider-than-usual guidance range for the third quarter citing the ongoing global uncertainty caused by COVID-19 pandemic.

Cognex projects third-quarter revenues to lie between $200 million and $220 million (mid-point $210million). The Zacks Consensus Estimate for revenues is pegged at $213.7 million, suggesting growth of 16.6% from the year-ago period.

The consensus mark for non-GAAP earnings per share is pinned at 33 cents, suggesting a 37.5% year-over-year increase.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in the other, the average surprise being 52%.

Let’s see how things are shaping up for the upcoming announcement.

Factors at Play

Sluggish demand across the overall factory automation market, particularly in Europe and the Americas, is expected to have negatively impacted the company’s overall quarterly financial performance. However, solid order activities across the consumer electronics and e-commerce markets are likely to offset the aforementioned negative impact.

Cognex Corporation Price and Consensus

Cognex Corporation Price and Consensus

Cognex Corporation price-consensus-chart | Cognex Corporation Quote

Moreover, some deferrals of logistics revenues are expected to have kept margins under pressure. The company estimates gross margin to be around the mid-70s range.

Nonetheless, Cognex’s cost-cutting measures, including reducing travel, hiring and discretionary expenses, are anticipated to have somewhat offset the negative impact of the above-mentioned factors. During the first-quarter earnings call, management had mentioned its plans to cut operating expenses by more than 10% sequentially.

What Our Model Says

Our proven model does not predict an earnings beat for Cognex this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Cognex currently carries a Zacks Rank of 3 and has an Earnings ESP of -3.03%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming releases:

Vishay Intertechnology, Inc. VSH has an Earnings ESP of +6.45% and flaunts a Zacks Rank of 1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alphabet GOOGL has an Earnings ESP of +7.40% and carries a Zacks Rank of 2, currently.

AMETEK, Inc. AME has an Earnings ESP of +0.83% and currently carries a Zacks Rank of 2.

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