Have you been paying attention to shares of Nordson (
NDSN Quick Quote NDSN - Free Report) ? Shares have been on the move with the stock up 4% over the past month. The stock hit a new 52-week high of $223.49 in the previous session. Nordson has gained 11.2% since the start of the year compared to the 15.3% move for the Zacks Industrial Products sector and the 12.7% return for the Zacks Manufacturing - General Industrial industry. What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 24, 2021, Nordson reported EPS of $2.12 versus consensus estimate of $1.65 while it beat the consensus revenue estimate by 7.46%.
For the current fiscal year, Nordson is expected to post earnings of $7.26 per share on $2.31 billion in revenues. This represents a 32.48% change in EPS on an 8.78% change in revenues. For the next fiscal year, the company is expected to earn $8.05 per share on $2.43 billion in revenues. This represents a year-over-year change of 10.86% and 5.13%, respectively.
Nordson may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Nordson has a Value Score of F. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 30.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 27X versus its peer group's average of 16X. Additionally, the stock has a PEG ratio of 2.37. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Nordson currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Nordson fits the bill. Thus, it seems as though Nordson shares could have potential in the weeks and months to come.
How Does Nordson Stack Up to the Competition?
Shares of Nordson have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Applied Industrial Technologies (
AIT Quick Quote AIT - Free Report) , Wolseley ( FERG Quick Quote FERG - Free Report) , and The Middleby ( MIDD Quick Quote MIDD - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 23% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Nordson, even beyond its own solid fundamental situation.