Industrial Precision Unit Aids Nordson (NDSN) Despite Cost Woes
Nordson Corporation NDSN is benefiting from strong customer demand for the industrial coatings, polymer processing and non-woven product lines, which is aiding the Industrial Precision Solutions segment. Growth in the medical interventional solutions product lines is aiding the Medical and Fluid Solutions segment’s revenues. Investments in automation, Artificial Intelligence, memory and electronic product innovation should drive Nordson’s growth in the quarters ahead.
For fiscal 2024 (ending October 2024), the company expects adjusted earnings to increase 2-7% from the year-ago period. Sales are expected to increase 4-7% year over year.
Nordson is likely to become more competent on the back of its acquisitions made over time. In August 2023, the company acquired ARAG Group and its subsidiaries. The acquisition expanded Nordson’s core capabilities in precision dispensing technology, thus helping it foray into the rapidly growing, precision agriculture end-market. ARAG is part of Nordson’s Industrial Precision Solutions segment. In November 2022, Nordson acquired CyberOptics Corporation, expanding its semiconductor test and inspection capabilities. In the first quarter of fiscal 2024 (ended January 2024), acquired assets boosted total revenues by 5.4%.
Nordson remains committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In the first three months of fiscal 2024, Nordson paid out dividends of $38.9 million, up 4.5% year over year. In the same period, it bought back shares worth $7.4 million. In August 2023, the company hiked its dividend by 5% to 68 cents per share. This marks the company’s 60th consecutive year of dividend increase.
However, weakness in the Advanced Technology Solutions segment raises concerns for the company. A decrease in demand for electronics dispensing product lines, serving in the cyclical semiconductor end market, is weighing on the Advanced Technology Solutions segment.
Escalating costs pose a threat to Nordson’s bottom line. Cost of sales increased 1.1% year over year in the first quarter of fiscal 2024 due to higher input costs. Also, in the first quarter of fiscal 2024, the company’s selling and administrative expenses increased 2.4% year over year due to increasing acquisition costs.
In the past year, shares of this Zacks Rank #3 (Hold) company have gained 26.9% compared with the industry’s 33.1% growth.
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Nordson Corporation (NDSN) : Free Stock Analysis Report
