It has been about a month since the last earnings report for Nordson (NDSN Quick QuoteNDSN - Free Report) . Shares have added about 3.3% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Nordson due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Nordson Q1 Earnings & Revenues Surpass Estimates

Nordson reported better-than-expected first-quarter fiscal 2022 (ended Jan 31, 2022) results. Its earnings beat the Zacks Consensus Estimate by 7.25%. Also, sales in the quarter surpassed estimates marginally.

The company’s adjusted earnings were $2.07 per share in the reported quarter, beating the Zacks Consensus Estimate of $1.93. On a year-over-year basis, the bottom line increased 57% from $1.32.

Revenue Details

In the reported quarter, Nordson’s revenues were $609.2 million, reflecting an increase of 15.7% from the year-ago number. Organic sales expanded 16%, driven by healthy end-market businesses, including industrial and electronics. Acquisitions/divestitures had a positive impact of 1.6%. Foreign currency translation had a negative impact of 1.9%.

The company’s revenues beat the Zacks Consensus Estimate of $608 million.

On a regional basis, revenues from the United States increased 3.3% year over year to $191.4 million. Revenues from operations in Japan fell 5.7% to $25.6 million, while that from the Asia Pacific region increased 31.4% to $187.7 million. Revenues generated from Europe rose 15.4% to $156 million, and that in the Americas increased 34.3% to $48.5 million.

Nordson reports revenues under two segments — Industrial Precision Solutions and Advanced Technology Solutions. A brief snapshot of the segmental sales is provided below:

Revenues generated from Industrial Precision Solutions amounted to $323.9 million, increasing 12.3% year over year. It represented 53.2% of the company’s revenues in the quarter.

Organic sales expanded 12% year over year. Acquisitions/divestitures had a positive impact of 3.2%, while foreign currency translation had a negative impact of 2.9%.

Advanced Technology Solutions’ sales were $285.2 million, up 19.8% from the year-ago reported quarter. It represented 46.8% of the company’s revenues in the quarter.

Organic sales increased 20.6% from the year-ago quarter, while foreign currency translation had a negative impact of 0.8%.

Margin Profile

In the reported quarter, Nordson’s cost of sales increased 13.7% year over year to $269 million. Notably, the cost of sales represented 44.2% of net sales. Gross profit was $340.1 million, up 17.3% year over year. The gross margin increased 70 basis points (bps) year over year to 55.8%. The company suffered from the adverse impacts of supply-chain woes and labor shortages.

Selling and administrative expenses increased 1.9% year over year to $184.3 million and represented 30.3% of net sales. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $182.8 million, the margin being 30%. Adjusted operating income in the reported quarter increased 44.3% year over year to $157.4 million, with the adjusted operating margin growing 500 bps to 26%.

Net interest expenses totaled $5.2 million, reflecting a decrease of 21.2% from the year-ago quarter.

Balance Sheet & Cash Flow

Exiting the quarter, Nordson’s cash and cash equivalents were $170.5 million, decreasing 43.2% from $300 million recorded in the last reported quarter. Long-term debt was $773.2 million, reflecting a 1.1% decline from $781.7 million.

In the first three months of fiscal 2022, the company repaid $1.3 million of long-term debts and $1.6 million of financial lease obligations.

It generated net cash of $118.1 million from operating activities, down 17.6% from the comparable period of the last year. Capital invested for purchasing property, plant and equipment totaled $12.5 million, increasing 58.2%.

Dividends/Share Buyback

In the first three months of fiscal 2022, the company paid out dividends amounting to $29.7 million, up 30.8% from $22.7 million in the previous-year period.

On Feb 9, 2022, Nordson announced that its board of directors approved a quarterly dividend of 51 cents per share. The dividend payment for the second quarter of fiscal 2022 (ending April 2022) will be made on Mar 8, 2022, to shareholders on record as of Feb 22, 2022.

The purchase of treasury shares by Nordson amounted to $35 million in the first three months of fiscal 2022, increasing from $5.3 million.

Outlook

Nordson anticipates solid orders and backlog (more than $900 million) to be beneficial in the second quarter of fiscal 2022. Pricing actions will also help mitigate the impacts of supply-chain and cost woes.

For the fiscal second quarter, the company predicts year-over-year sales growth of 6-10% and adjusted earnings of $2.20-$2.30 per share.

For fiscal 2022 (ending October 2022), Nordson anticipates year-over-year adjusted earnings growth of 14-18%. Sales are expected to increase 7-10% from the previous fiscal year’s reported number.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Nordson has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nordson has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.