End-Market Strength Aids Nordson (NDSN) Despite Cost Woes
Nordson Corporation NDSN is poised to benefit from its diverse end markets and growth across all major product lines. Its Industrial Precision Solution segment is benefiting from robust demand for packaging and assembly product lines in the food and beverage industry and industrial end markets in most geographies.
Growth across all major product lines, especially in the electronics dispense and biopharma fluid component product lines, is supporting the Advanced Technology Solutions segment. Strength across international regions is driving the segment’s performance.
Nordson is likely to become more competent on the back of its acquisitions made over time. In November 2022, NDSN acquired CyberOptics Corporation. The buyout helps expand its semiconductor test and inspection capabilities with CyberOptics’ 3D optical sensing technology and wireless measurement sensors.
NDSN’s November 2021 buyout of NDC Technologies expanded its test and inspection platform. The acquisition enabled it to strengthen its position in the electronics end market and expand into new end markets, including film extrusion & converting, consumer non-durable, cable & tubing, and energy storage.
Nordson’s efforts to reward its shareholders through dividend payments and share repurchases are notable. NDSN paid out dividends worth $88.7 million and bought back shares of more than $230 million in the first nine months of fiscal 2022 (ended Jul 31, 2022). In August 2022, the board hiked its quarterly dividend by 27% to 65 cents.
However, this currently Zacks Rank #3 (Hold) stock is facing challenges related to supply-chain and cost woes. In the first nine months of fiscal 2022, Nordson’s cost of sales increased nearly 10% from the year-ago fiscal period’s level, while selling, general and administrative expenses inched up around 2%. Escalating costs, supply-chain constraints and logistics challenges might weigh on the stock’s performance in the near term.
Nordson Corporation Price
Nordson Corporation price | Nordson Corporation Quote
Given Nordson’s global presence, it is exposed to various environmental laws and regulations across the countries it operates in. Also, NDSN remains vulnerable to foreign currency and geopolitical issues. In the fiscal third quarter, forex woes hampered its revenues 5% year over year. NDSN’s overseas business might be depressed by a stronger U.S. dollar in the quarters ahead.
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. AIT presently has a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 24.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
AIT’s earnings estimates have increased 3% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 25.9% in the past six months.
IDEX Corporation IEX presently has a Zacks Rank of #2 (Buy). IEX’s earnings surprise in the last four quarters was 5.7%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 1.8% for 2022. The stock has rallied 20.7% in the past six months.
EnerSys ENS delivered an average four-quarter earnings surprise of 2.1%. ENS presently carries a Zacks Rank of 2.
ENS’ earnings estimates have increased 0.6% for fiscal 2023 (ending March 2023) in the past 60 days. The stock has gained 3.8% in the past six months.
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