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Nordson (NDSN) Exhibits Strong Prospects Amid Challenges

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On Mar 30, we issued an updated research report on Nordson Corporation .

In the past three months, this Zacks Rank #3 (Hold) stock has returned 1% compared with the industry’s growth of 86.5%.

Present Scenario

Nordson is well poised to benefit from strength in its test & inspection, consumer non-durable, industrial and fluid dispense end markets in the quarters ahead. Also, going forward, implementation of Nordson Business System is likely to prove beneficial. For fiscal 2021 (ended October 2021), it anticipates revenue growth of 4-6% on a year-over-year basis.

Also, Nordson believes in strengthening and expanding its businesses through acquisitions. In this regard, its acquisition of vivaMOS Ltd. (September 2020) has been strengthening its test and inspection capabilities. Also, the Fluortek buyout (June 2020) has been its boosting medical product lines. Notably, for the company’s Advanced Technology Solutions segment, acquired assets had a positive impact of 2% in the first quarter of fiscal 2021 (ended Jan 31, 2021).

Moreover, it rewards shareholders handsomely through dividend payments and share buybacks. For instance, in first-quarter fiscal 2021, the company used $22.7 million for paying out dividends and repurchasing shares worth $5.3 million.

However, though Nordson’s long-term debt decreased 8.1% sequentially to $981 million in the fiscal first-quarter, its cash and cash equivalent balance of $225.7 million does not seem impressive, considering its high debt profile.

Further, the company’s international businesses have exposed it to risks arising from unfavorable movements in foreign currencies and geopolitical issues. It’s worth noting that in the fiscal first quarter, the company’s revenues declined 1.6% year over year in Japan.

Stocks to Consider

Some better-ranked stocks from the same space are Applied Industrial Technologies, Inc. (AIT - Free Report) , The Middleby Corporation and Kadant Inc (KAI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Applied Industrial delivered a positive earnings surprise of 21.92%, on average, in the trailing four quarters.

Middleby delivered a positive earnings surprise of 22.98%, on average, in the trailing four quarters.

Kadant delivered a positive earnings surprise of 30.95%, on average, in the trailing four quarters.

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