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Cognex (CGNX) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analyze Cognex (CGNX) Piotroski F-Score for 2023. Detailed financial review on profitability, liquidity, leverage, and efficiency with a score of 5/9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 5

We're running Cognex (CGNX) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
0
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

Cognex (CGNX) was analyzed using the Piotroski F-Score, a 9-criteria scoring system that assesses a company's financial strength based on profitability, liquidity, and operating efficiency. The company scored 5 out of 9 points. Key points include: 1. Positive net income of $113,234,000 in 2023, showing profitability. 2. Positive cash flow from operations at $112,916,000. 3. Decrease in Return on Assets (ROA) from 10.88% in 2022 to 5.7% in 2023, indicating reduced efficiency. 4. Operating cash flow lower than net income, suggesting cash generation challenges. 5. Increased leverage from 0.016 in 2022 to 0.034 in 2023, indicating higher debt. 6. Improved Current Ratio from 3.82 in 2022 to 4.47 in 2023, highlighting better liquidity. 7. An increase in outstanding shares from 173,407,000 to 172,249,000, affecting shareholder value. 8. Slight increase in gross margin, indicating better cost management. 9. Decrease in Asset Turnover Ratio from 0.5079 in 2022 to 0.4213 in 2023, showing reduced asset utilization.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 5, Cognex has some positive financial metrics but also several areas of concern. The company remains profitable and has strong liquidity, but its decreasing ROA, increased leverage, and lower asset turnover highlight operational inefficiencies. Potential investors should consider these factors carefully. If you prefer stable profitability and liquidity, Cognex might be worth exploring further. However, be mindful of the financial risks indicated by increasing debt and decreasing efficiency. It's recommended to monitor future financial performance and trends closely before making investment decisions.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Cognex (CGNX)

Company has a positive net income?

This criterion checks whether a company's net income is positive. A positive net income is a key indicator of profitability.

Historical Net Income of Cognex (CGNX)

For the fiscal year 2023, Cognex (CGNX) reported a net income of $113,234,000, which is indeed positive. This trend earns Cognex 1 point under the Piotroski criteria. Looking at the historical data, Cognex has managed to maintain a profitable stance for most years, except for 2009, where a negative net income of $-4,869,000 was recorded. The latest figure, while significantly lower than the 2021 peak of $279,881,000, still underscores the company's ability to stay profitable even in volatile market conditions.

Company has a positive cash flow?

Review if CFO for a given year is positive to discern operational viability.

Historical Operating Cash Flow of Cognex (CGNX)

In 2023, Cognex (CGNX) has reported a Cash Flow from Operations (CFO) of $112,916,000. This value is positive, which adds 1 point to the Piotroski F-Score. Historically, from 2003 to 2023, the CFO has mostly seen an upward trend with minor fluctuations. The past references, such as $314,065,000 in 2021 and $243,406,000 in 2022, depict stronger financial strength in recent years, although 2023 shows a downturn. Nevertheless, being positive indicates continued operational cash generation, a favorable sign despite the dip from previously high levels.

Return on Assets (ROA) are growing?

Change in ROA measures the change in Return on Assets from one year to the next. This criterion assesses the efficiency of a company in generating profits from its assets.

Historical change in Return on Assets (ROA) of Cognex (CGNX)

Comparing the Return on Assets (ROA) of Cognex (CGNX) reveals a decline from 0.1088 in 2022 to 0.057 in 2023. This decline indicates a 47.6% drop in asset profitability, reflecting less efficient profit generation. Based on the Piotroski Analysis criterion, this drop sets the score to 0. Additionally, when juxtaposed against the industry's median ROA of 0.4813 for 2023, Cognex’s performance starkly lags behind, underscoring potential inefficiency issues. Historically, the company's performance showed fluctuations, but the recent decrease suggests an evident drop in operational efficiency.

Operating Cashflow are higher than Netincome?

This criterion compares the company's operating cash flow to its net income. A higher operating cash flow than net income indicates efficient cash generation from core business operations, translating to healthy financial performance.

Historical accruals of Cognex (CGNX)

In 2023, Cognex reported an operating cash flow of $112.92 million and a net income of $113.23 million. This results in an operating cash flow that is slightly lower than net income, giving a Piotroski score of 0 for this criterion. Historically, Cognex has demonstrated varying levels of operating cash flow and net income alignment. For instance, the company had superior operating cash flows in the years 2007, 2008, and more significantly in 2021 with $314.07 million compared to the net income of $279.88 million. The lower cash flow in 2023 relative to net income indicates potential challenges in converting sales to cash. Such a situation might necessitate a closer look at working capital management and receivables collection.

Liquidity of Cognex (CGNX)

Leverage is declining?

Change in Leverage evaluates the shift in a company's debt load. Lower leverage often implies less financial risk.

Historical leverage of Cognex (CGNX)

Comparing Cognex's leverage, we observe an increase from 0.016 in 2022 to 0.0342 in 2023. This rise indicates higher debt levels relative to equity, posing increased financial risk. Historically, until 2018, Cognex maintained zero debt. The leverage then slowly began to creep up, highlighting a potential trend in rising financial obligations. Given this increase, Cognex scores 0 points on this Piotroski criterion.

Current Ratio is growing?

The Current Ratio is calculated by dividing a company's current assets by its current liabilities, providing insight into its liquidity.

Historical Current Ratio of Cognex (CGNX)

In 2023, Cognex's Current Ratio increased to 4.4705 from 3.8235 in 2022, resulting in the allocation of 1 point. This rise indicates a better liquidity position, showing that the company has more readily available assets to cover short-term liabilities. This level is quite robust compared to the industry median ratio of 2.6482, suggesting Cognex is in a strong liquidity position. Looking at the trend over the last 20 years, Cognex has often maintained a healthy Current Ratio, often significantly above the industry median.

Number of shares not diluted?

This criterion examines whether the company has been issuing more shares or buying back shares, impacting existing shareholders.

Historical outstanding shares of Cognex (CGNX)

The Outstanding Shares for Cognex (CGNX) increased from 173,407,000 in 2022 to 172,249,000 in 2023, demonstrating an increase. This warrants a score of 0 rather than 1. Reviewing the last 20 years of Outstanding Shares, a mix of increases and decreases in shares is observed. For instance, shares peaked at 191,740,000 in 2005 and saw significant buybacks reducing shares to 158,636,000 in 2009. However, a recent stringent trend shows more consistency, fluctuating around the 170,000,000 mark since 2011. This trend reflects Cognex's strategic capital management practices, which impact stock dilution and shareholder value.

Operating of Cognex (CGNX)

Cross Margin is growing?

Change in Gross Margin for Cognex (CGNX) compares the company’s gross margin year over year. A higher gross margin indicates improved efficiency in production or better control over costs. It reflects the portion of revenue that exceeds the cost of goods sold, highlighting how well the company is managing its production expenses relative to its sales.

Historical gross margin of Cognex (CGNX)

Comparing the gross margin of 0.7179 in 2023 with the 0.7175 in 2022 for Cognex, there is a slight increase. This increment, albeit marginal, implies that Cognex has improved in efficiently managing its production costs or has achieved better control over its cost of goods sold. Given the historical data, Cognex has maintained a stable and high gross margin over the past two decades, consistently outperforming the industry median gross margin. The industry median gross margin has fluctuated but remained significantly lower than Cognex’s margins. This sustained trend reinforces the company’s strong operational efficiency. Therefore, the gross margin for 2023 getting a point is positive, as it continues to signal the company's effective cost management strategy despite the minor increase.

Asset Turnover Ratio is growing?

Asset Turnover compares a company's sales to its asset base, reflecting efficiency in using assets. It is critical for understanding operational efficiency.

Historical asset turnover ratio of Cognex (CGNX)

For Cognex (CGNX), the Asset Turnover has decreased from 0.5079 in 2022 to 0.4213 in 2023, indicating diminished efficiency in asset utilization. From a historical perspective, the asset turnover ratios over the past 20 years show fluctuations, with the highest peak observed in 2018 at 0.643% and the lowest in 2009 at 0.3846%. Given this backdrop, the decline from 2022 to 2023 is somewhat significant, showing a waning operational efficiency trend for the latest year. Thus, we assign 0 points for this criterion.


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