Nordson Corporation (NDSN) recently announced an increase in its quarterly dividend rate and approval for a new share buyback program. These announcements, made a week before the company is scheduled to release its third quarter of fiscal 2013 earnings results on Aug 23, 2013, will surely raise investors’ confidence in the stock.
The revised quarterly dividend rate has been fixed at 18 cents, an increase of 20.0% or 3 cents over the previous rate of 15 cents. This increase marks Nordson’s 50th annual increase in a row. A similar announced was made in Aug 2012, when the company announced a 20% increase in its quarterly dividend rate from 12.5 cents to 15 cents per share.
The new dividend will be paid on Sep 10, 2013 to shareholders of record as on Aug 27, 2013.
Also, Nordson received approval for a $200 million share buyback program that replaces its existing $100 million authorization. Of the old program, roughly $41 million shares have already been repurchased by the company.
Consistent dividend payments with occasional increases and share buyback programs has been Nordson’s favored mode of rewarding its shareholders over time and points toward the company’s healthy balance sheet and strong cash position.
If we steal a look into the results of the quarter ended Apr 30, 2013, Nordson paid $10 million in dividends and repurchased shares worth $22 million. Quarter ending, the company had cash and marketable securities balance of $62.8 million.
Apart from the capital deployment actions of Nordson, a brief discussion on the outlook for the third quarter of fiscal 2013 is given below:
For the fiscal third quarter of 2013, management of Nordson Corporation anticipates sales to range within $404-$419 million, up 6%-10% year over year. Organic growth is predicted to fall within the 0%-4% range while acquisitions are expected to have a 7% positive impact. Currency translation is likely to impact results negatively by 1%. Earnings per share are expected to be within the $1.00-$1.09 range.
The Zacks Consensus Estimate for Nordson currently stands at $1.04 for the third quarter, reflecting a decline of 2.2% year over year. Earnings Estimate for fiscal 2013 and 2014 are at $3.62 and $4.11, up 0.6% and 13.3%, respectively.
Nordson Corporation currently has a $4.5 billion market capitalization. The stock currently has a Zacks Rank #2 (Buy). Other stocks to watch out for in the industry are Gorman-Rupp Co. (GRC) and Graham Corp. (GHM), each with a Zacks Rank #1 (Strong Buy) while Barnes Group Inc. (B) carries a Zacks Rank #2 (Buy).
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