Last week, you might have seen that Nordson Corporation (NASDAQ:NDSN) released its first-quarter result to the market. The early response was not positive, with shares down 3.0% to US$172 in the past week. Revenues were in line with forecasts, at US$495m, although statutory earnings per share came in 14% below what analysts expected, at US$0.89 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Nordson's six analysts is for revenues of US$2.24b in 2020, which would reflect a modest 2.2% increase on its sales over the past 12 months. Statutory earnings per share are expected to rise 4.0% to US$6.16. Before this earnings report, analysts had been forecasting revenues of US$2.25b and earnings per share (EPS) of US$6.23 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of US$178, showing that the business is executing well and in line with expectations. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Nordson at US$200 per share, while the most bearish prices it at US$140. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Nordson's past performance and to peers in the same market. We would highlight that Nordson's revenue growth is expected to slow, with forecast 2.2% increase next year well below the historical 7.0%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 1.5% next year. So it's pretty clear that, while Nordson's revenue growth is expected to slow, it's still expected to grow faster than the market itself.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Nordson. Long-term earnings power is much more important than next year's profits. We have forecasts for Nordson going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Nordson's balance sheet, and whether we think Nordson is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.