Cognex DataMan 300

Meet the Cognex DataMan 300 barcode reader. Image source: Cognex.

What's happening: Shares of Cognex (NASDAQ:CGNX) started Tuesday's trading session more than 26% below Monday's closing price. The maker of tools that help machines collect and interpret visual data reported second-quarter results Monday night, beating Wall Street's earnings estimates but falling short of revenue targets. Worse, Cognex set third-quarter guidance far below current analyst projections.

Why it's happening: In the second quarter, Cognex reported adjusted earnings of $0.52 per diluted share, a 79% year-over-year boost and comfortably ahead of the analyst consensus at $0.47 per share. Sales surged 56% higher to land at $143.8 million, but still missing the $150 million consensus target. Management pointed to strong orders from the consumer electronics industry as a driver of revenue growth.

All of these reported figures are for Cognex's continuing operations, excluding results from the surface inspections systems division which was recently sold to far larger industry peer Ametek. That $160 million deal closed right after the end of Cognex's second quarter. If this operation had been included in the second quarter's reported results, revenues would have been $155 million, near the midpoint of management's official guidance for the period.

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Looking ahead, Cognex centered its revenue outlook for the third quarter at $107.5 million, far below the current Street view, which points to roughly $144 million. The period will measure up poorly against large revenue-bearing deployments in both the third quarter of 2014 and the just-reported second quarter of 2015, which will not be repeated in the upcoming quarter. Furthermore, clients across the Americas aren't exactly rushing to place new Cognex orders right now. In the second quarter, the revenues from the Americas segment grew a mere 3.8% year over year and management expects that timid growth curve to continue into the third quarter.

Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Cognex. Try any of our Foolish newsletter services free for 30 days.

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