Machine vision technology company Cognex NASDAQ:CGNX fell short of the market’s revenue expectations in Q2 CY2026, but sales rose 16.9% year on year to $291.3 million. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $310 million at the midpoint, or 9.9% above analysts’ estimates. Its non-GAAP profit of $0.45 per share was 5.9% above analysts’ consensus estimates.
Cognex (CGNX) Q2 CY2026 Highlights:
- Revenue: $291.3 million vs analyst estimates of $293.3 million (16.9% year-on-year growth, 0.7% miss)
- Adjusted EPS: $0.45 vs analyst estimates of $0.42 (5.9% beat)
- Adjusted EBITDA: $93.66 million vs analyst estimates of $87.98 million (32.2% margin, 6.5% beat)
- Revenue Guidance for Q3 CY2026 is $310 million at the midpoint, above analyst estimates of $282.1 million
- Adjusted EPS guidance for the full year is $1.66 at the midpoint, beating analyst estimates by 11.8%
- Operating Margin: 29.4%, up from 17.4% in the same quarter last year
- Free Cash Flow Margin: 23.2%, up from 16.2% in the same quarter last year
- Market Capitalization: $11.9 billion
Company Overview
Founded in 1981 when computer vision was in its infancy, Cognex NASDAQ:CGNX develops machine vision systems and software that help manufacturers and logistics companies automate quality inspection and tracking of products.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $1.09 billion in revenue over the past 12 months, Cognex is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels.
As you can see below, Cognex’s sales grew at a sluggish 2.1% compounded annual growth rate over the last five years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Cognex’s annualized revenue growth of 13.6% over the last two years is above its five-year trend, suggesting its demand recently accelerated.
This quarter, Cognex’s revenue grew by 16.9% year on year to $291.3 million but fell short of Wall Street’s estimates. Company management is currently guiding for a 12% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 5.8% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and implies the market sees some success for its newer products and services.
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Adjusted Operating Margin
Cognex has been a well-oiled machine over the last five years. It demonstrated elite profitability for a business services business, boasting an average adjusted operating margin of 21.7%.
Looking at the trend in its profitability, Cognex’s adjusted operating margin decreased by 3.2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
In Q2, Cognex generated an adjusted operating margin profit margin of 33.2%, up 14.5 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for Cognex, its EPS declined by 2.5% annually over the last five years while its revenue grew by 2.1%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.
We can take a deeper look into Cognex’s earnings to better understand the drivers of its performance. As we mentioned earlier, Cognex’s adjusted operating margin expanded this quarter but declined by 3.2 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Cognex, its two-year annual EPS growth of 51% was higher than its five-year trend. This acceleration made it one of the faster-growing business services companies in recent history.
In Q2, Cognex reported adjusted EPS of $0.45, up from $0.25 in the same quarter last year. This print beat analysts’ estimates by 5.9%. Over the next 12 months, Wall Street expects Cognex’s full-year EPS to grow 14.7% from $1.39 to $1.59.
Key Takeaways from Cognex’s Q2 Results
We were impressed by Cognex’s optimistic revenue guidance for next quarter, which blew past analysts’ expectations. We were also excited its full-year EPS guidance outperformed Wall Street’s estimates by a wide margin. On the other hand, its revenue slightly missed. Zooming out, we think this quarter featured some important positives. The stock traded up 1.9% to $72.05 immediately following the results.
Cognex may have had a good quarter, but does that mean you should invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. .