Head to Head Analysis: Cognex (NASDAQ:CGNX) & Arrow Electronics (NYSE:ARW)

Cognex (NASDAQ:CGNX) and Arrow Electronics (NYSE:ARW) are both technology companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.

Profitability

This table compares Cognex and Arrow Electronics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cognex	16.05%	13.50%	10.02%
Arrow Electronics	2.26%	13.41%	2.83%

Risk & Volatility

Cognex has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500. Comparatively, Arrow Electronics has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500.

Insider & Institutional Ownership

88.1% of Cognex shares are owned by institutional investors. Comparatively, 99.3% of Arrow Electronics shares are owned by institutional investors. 1.7% of Cognex shares are owned by company insiders. Comparatively, 0.8% of Arrow Electronics shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Cognex and Arrow Electronics, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cognex	0	7	10	1	2.67
Arrow Electronics	1	1	3	1	2.67

Cognex presently has a consensus target price of $75.57, suggesting a potential upside of 39.97%. Arrow Electronics has a consensus target price of $233.25, suggesting a potential upside of 9.07%. Given Cognex’s higher probable upside, equities research analysts clearly believe Cognex is more favorable than Arrow Electronics.

Earnings & Valuation

This table compares Cognex and Arrow Electronics”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cognex	$994.36 million	9.13	$114.44 million	$1.03	52.42
Arrow Electronics	$35.92 billion	0.30	$571.27 million	$15.65	13.67

Arrow Electronics has higher revenue and earnings than Cognex. Arrow Electronics is trading at a lower price-to-earnings ratio than Cognex, indicating that it is currently the more affordable of the two stocks.

Summary

Cognex beats Arrow Electronics on 9 of the 13 factors compared between the two stocks.

About Cognex

Cognex Corporation provides machine vision products that capture and analyze visual information to automate manufacturing and distribution tasks worldwide. Its machine vision products are used to automate the manufacturing and tracking of discrete items, including mobile phones, electric vehicle batteries, and e-commerce packages by locating, identifying, inspecting, and measuring them during the manufacturing or distribution process. The company offers VisionPro software, a suite of patented vision tools for advanced programming; QuickBuild that allows customers to build vision applications with a graphical, flowchart-based programming interface; and Cognex deep learning vision software. It also provides a range of inspection tasks, including part location, identification, measurement, assembly verification, and robotic guidance; vision sensors for vision applications, such as checking the presence and size of parts; and the In-Sight product line of vision systems and sensors. In addition, the company offers DataMan, an image-based barcode readers and barcode verifiers. It sells its products to automotive, logistics, consumer electronics, medical-related, semiconductor, consumer products, food and beverage, and others, as well as through a network of distributors and integrators. The company was incorporated in 1981 and is headquartered in Natick, Massachusetts.

About Arrow Electronics

Arrow Electronics, Inc. provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates in two segments, Global Components and Global Enterprise Computing Solutions. The Global Components segment markets and distributes electronic components comprising semiconductor products and related services; interconnect, passive, and electromechanical products, including capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; and computing and memory products, as well as other products and services. The Global Enterprise Computing Solutions segment offers computing solutions, such as datacenter, cloud, security, and analytics solutions. This segment also provides access to various services, including engineering and integration support, warehousing and logistics, marketing resources, and authorized hardware and software training. The company serves original equipment manufacturers, value-added resellers, managed service providers, contract manufacturers, and other commercial customers. Arrow Electronics, Inc. was founded in 1935 and is based in Centennial, Colorado.