Is Cognex Corp. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Cognex Corp. has moved from attractive to expensive, indicating a shift towards overvaluation. The company appears overvalued based on its P/E ratio of 44, which is significantly higher than its peers, such as Onto Innovation, Inc. with a P/E of 20.49, and Sensata Technologies Holding Plc at 12.23. Additionally, Cognex's EV to EBITDA ratio stands at 30.68, while Novanta, Inc. has a much lower ratio of 24.65, further highlighting the disparity in valuation.
In terms of returns, Cognex has outperformed the S&P 500 in the short term, with a year-to-date return of 28.39% compared to the S&P 500's 13.30%. However, over longer periods, such as the 3-year and 5-year returns, Cognex has significantly lagged behind the benchmark, with returns of only 5.94% and -33.16%, respectively. This mixed performance, coupled with high valuation ratios, reinforces the conclusion that Cognex Corp. is currently overvalued.