Industrial Precision Unit Aids Nordson (NDSN) Amid Cost Woes
Nordson Corporation NDSN is well-poised to gain from strong customer demand for polymer processing, industrial coatings and packaging product lines combined with the execution of the Ascend strategy within the Industrial Precision Solutions segment. Investments in automation, Artificial Intelligence, memory and electronic product innovation should further support the company’s growth. The company’s diversified business structure is a boon.
The company is steadily strengthening its business through acquisitions. NDSN acquired ARAG Group and its subsidiaries in August 2023, which expanded Nordson’s core capabilities in precision dispensing technology, thus helping the company foray into the rapidly growing precision agriculture end market. ARAG is part of NDSN’s Industrial Precision Solutions segment. Also, in November 2022, the company acquired CyberOptics Corporation, thus expanding its semiconductor test and inspection capabilities. In fiscal 2023 (ended Oct 31, 2023), acquired assets boosted the company’s total revenues by 6.9%.
Nordson continues to increase shareholders’ value through dividend payments and share buybacks. In fiscal 2023, the company paid out dividends of $150.4 million, up 19.4% year over year. In the same period, it bought back shares worth $78.2 million. In August 2023, the company hiked its dividend by 5% to 68 cents per share. This marks NDSN’s 60th consecutive year of dividend increase.
However, Nordson’s Advanced Technology Solutions segment is experiencing weakness due to a decrease in electronics dispensing product lines serving in the cyclical semiconductor end market. Weakness in the medical fluid components related to the biopharma end market and fluid solutions product lines has been a drag on the Medical and Fluid Solutions segment’s performance.
Escalating costs and expenses have been a concern for NDSN over time. The cost of sales increased 3.4% in fiscal 2023. Also, in fiscal 2023, NDSN’s gross margin decreased 90 basis points due to reduced manufacturing efficiency and severance in sites dealing with significant volume decreases and incremental inventory.
In the past year, this Zacks Rank #3 (Hold) company has gained 8.8%.
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Stocks to Consider
Some better-ranked companies from the Manufacturing - General Industrial industry are discussed below:
Flowserve Corporation FLS presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has increased 1%. The stock has risen 32.6% in the past year.
Applied Industrial Technologies, Inc. AIT presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.9%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.8% in the past 60 days. Shares of Applied Industrial have rallied 36.4% in the past year.
Crane Company CR currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 29.8%.
In the past 60 days, the Zacks Consensus Estimate for Crane’s 2023 earnings has remained steady. The stock has risen 48% in the past year.
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Flowserve Corporation (FLS) : Free Stock Analysis Report
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Nordson Corporation (NDSN) : Free Stock Analysis Report
Crane Company (CR) : Free Stock Analysis Report
