What happened
Shares in machine vision company Cognex (CGNX -1.19%) rose more than 6% as of midday on Friday. The news comes after a positive set of fourth-quarter results released after the closing bell on Thursday.
In a nutshell, the revenue of $244 million came in above the high end of the guidance range of $210 million to $230 million. Meanwhile, the outlook for the first quarter calls for low double-digit revenue growth on the same period of 2021.
Image source: Getty Images.
Discussing the reasons for the better-than-expected revenue, management said it had seen an improvement in its delivery times from suppliers. In plain English, that means Cognex was able to receive more timely deliveries of materials, such as semiconductors, it needs to manufacture its equipment. As such, it was able to produce more out of its backlog of orders and so beat its revenue expectations.
For reference, almost all of the industrial sector is suffering from supply chain issues that are causing elevated costs and a shortage of some critical materials and products.
So what
It's a good result under the circumstances and bodes well for the rest of 2022. The economy is reopening, and many companies expect to see an easing in conditions by the second half.
In addition, Cognex's end markets are generally in good shape, and it remains one of the best reopening stocks to buy. Its logistics end market benefits from increased investment in e-commerce facilities, and its automotive sales benefit from increased spending on electric vehicles and batteries. The wild card is consumer electronics, where orders fluctuate yearly according to customer product development plans.
Now what
It's reasonable to expect Cognex's logistics revenue to stay strong, and there's no slowdown in electric vehicle spending in the economy. However, management has little visibility into its consumer electronics orders in 2022, as they usually fall in the second and third quarters as customers prepare to ramp up production in the fourth quarter. Management usually gives color on that in the spring -- something to look out for.
