Contrasting ESCO Technologies (ESE) and Cognex Corporation (CGNX)

ESCO Technologies (NYSE: ESE) and Cognex Corporation (NASDAQ:CGNX) are both industrial products companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, institutional ownership, dividends and earnings.

Volatility & Risk

ESCO Technologies has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500. Comparatively, Cognex Corporation has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for ESCO Technologies and Cognex Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ESCO Technologies 0 0 3 0 3.00
Cognex Corporation 0 5 5 0 2.50

ESCO Technologies presently has a consensus target price of $66.50, indicating a potential upside of 14.75%. Cognex Corporation has a consensus target price of $94.00, indicating a potential downside of 23.99%. Given ESCO Technologies’ stronger consensus rating and higher probable upside, analysts plainly believe ESCO Technologies is more favorable than Cognex Corporation.

Valuation & Earnings

This table compares ESCO Technologies and Cognex Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ESCO Technologies $638.24 million 2.35 $108.39 million $1.98 29.27
Cognex Corporation $585.12 million 18.30 $207.39 million $2.18 56.73

Cognex Corporation has higher revenue, but lower earnings than ESCO Technologies. ESCO Technologies is trading at a lower price-to-earnings ratio than Cognex Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares ESCO Technologies and Cognex Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ESCO Technologies 8.06% 8.36% 4.84%
Cognex Corporation 33.10% 19.51% 17.95%

Dividends

ESCO Technologies pays an annual dividend of $0.32 per share and has a dividend yield of 0.6%. Cognex Corporation pays an annual dividend of $0.34 per share and has a dividend yield of 0.3%. ESCO Technologies pays out 16.2% of its earnings in the form of a dividend. Cognex Corporation pays out 15.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Institutional and Insider Ownership

95.2% of ESCO Technologies shares are owned by institutional investors. Comparatively, 86.5% of Cognex Corporation shares are owned by institutional investors. 2.3% of ESCO Technologies shares are owned by company insiders. Comparatively, 5.6% of Cognex Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Cognex Corporation beats ESCO Technologies on 11 of the 16 factors compared between the two stocks.

ESCO Technologies Company Profile

ESCO Technologies Inc. (ESCO) is a producer of engineered products and systems sold to customers for utility, industrial, aerospace and commercial applications. The Company operates through four segments: Filtration/Fluid Flow (Filtration), RF Shielding and Test (Test), Utility Solutions Group (USG) and Technical Packaging. The filtration segment’s activities are managed by its subsidiaries, Crissair, Inc. (Crissair), PTI Technologies Inc. (PTI), VACCO Industries (VACCO) and Westland Technologies Inc. (Westland). The Test segment activities are managed by its subsidiaries, Beijing Lindgren ElectronMagnetic Technology Co., Ltd., ETS-Lindgren Inc. and ETS-Lindgren OY. The USG segment activities are managed by its subsidiaries, including Doble Engineering Company, Doble PowerTest Ltd and Doble TransiNor AS. The technical packaging activities are managed by its subsidiaries, Thermoform Engineered Quality LLC (TEQ), Plastique Limited and Plastique Sp. z o.o.

Cognex Corporation Company Profile

Cognex Corporation (Cognex) is a provider of machine vision products that capture and analyze visual information in order to automate tasks, primarily in manufacturing processes, where vision is required. The Company operates through the machine vision technology segment. The Company’s machine vision products are used to automate the manufacture and tracking of discrete items, such as mobile phones, aspirin bottles and automobile tires, by locating, identifying, inspecting and measuring them during the manufacturing or distribution process. The Company’s products include vision software, vision systems, vision sensors and identification (ID) products. Its products range from vision sensors that are integrated, to personal computer (PC)-based systems for users. Its products also have a range of physical forms, depending upon the user’s need. Cognex sells its products through a direct sales force, as well as through a global network of integration and distribution partners.

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