Machine vision technology company Cognex (NASDAQ: CGNX) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 9.9% year on year to $252.3 million. On top of that, next quarter’s revenue guidance ($245 million at the midpoint) was surprisingly good and 7.1% above what analysts were expecting. Its non-GAAP profit of $0.27 per share was 22.9% above analysts’ consensus estimates.

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"2025 marked a return to profitable growth for Cognex, with constant‑currency revenue growth of 8% and adjusted EPS growth of 38%," said Matt Moschner, President and CEO.

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

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $994.4 million 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 4.2% annualized revenue growth over the last five years was mediocre. This shows it couldn’t generate demand in any major way and is a tough 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 9% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

This quarter, Cognex reported year-on-year revenue growth of 9.9%, and its $252.3 million of revenue exceeded Wall Street’s estimates by 5.4%. Company management is currently guiding for a 13.4% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 4.7% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will face some demand challenges.

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Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

Cognex has been a well-oiled machine over the last five years. It demonstrated elite profitability for a business services business, boasting an average operating margin of 20.2%.

Analyzing the trend in its profitability, Cognex’s operating margin decreased by 14 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.

This quarter, Cognex generated an operating margin profit margin of 14%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Cognex, its EPS declined by 1.3% annually over the last five years while its revenue grew by 4.2%. 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 operating margin was flat this quarter but declined by 14 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 18.4% was higher than its five-year trend. This acceleration made it one of the faster-growing business services companies in recent history.

In Q4, Cognex reported adjusted EPS of $0.27, up from $0.20 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Cognex’s full-year EPS of $1.01 to grow 11.9%.

Key Takeaways from Cognex’s Q4 Results

It was good to see Cognex beat analysts’ EPS expectations this quarter. We were also excited its revenue outperformed Wall Street’s estimates by a wide margin. On the other hand, its full-year EPS guidance missed. Zooming out, we think this was a solid print. The stock traded up 19% to $51.19 immediately following the results.

Cognex put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).