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Nordson Corporation (NDSN - Free Report) is benefiting from strength in its Industrial Precision Solution segment due to robust demand in the polymer processing product line and steady growth in industrial coating products and packaging product lines in the food and beverage industry, as well as in the industrial end markets. The NDC Technologies acquisition is also boosting the unit’s performance. Revenues from the segment increased 7.2% year over year in fiscal 2022.
Robust growth in the biopharma fluid component product line is driving the Medical and fluid solution segment’s performance. Revenues from the unit rose 7.6% in fiscal 2022. Strength in the test and inspection, and electronics dispense product lines is aiding the Advanced Technology Solution segment, revenues of which jumped 20.7%. Organic sales growth due to volume increases and pricing actions is supporting Nordson’s growth. For fiscal 2023, the company expects sales to increase 1-7% from the fiscal 2022 figure.
Nordson has been capitalizing on acquisitions by penetrating unexplored markets and expanding its product lines. In November 2022, the company acquired CyberOptics Corporation, expanding its semiconductor test and inspection capabilities.
In November 2021, the company acquired NDC, expanding its test and inspection platform. The buyout has enabled Nordson to strengthen its position in the electronics end market, and expand into new end markets, including film extrusion & converting, consumer non-durable, cable & tubing, and energy storage. The NDC acquisition has boosted fiscal 2022 sales by 3%.
Nordson has been committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In September 2022, the company’s board authorized the repurchase of up to an additional $500 million shares. This is on top of $160 million remaining under its existing share repurchase authorization, approved in 2018.
In fiscal 2022, Nordson paid out dividends of $125.9 million, up 28.9% year over year. The company also bought back shares worth more than $260 million (compared with $61 million in fiscal 2021) in the same period. In August 2022, NDSN hiked its quarterly dividend by 27%, marking its 59th consecutive year of dividend increase.
Despite the positives, Nordson has been dealing with the adverse impacts of a high cost of sales due to rising inflation. Cost of sales increased 12.1% year over year in fiscal 2022. The escalating cost of sales is hurting the company’s margins. In the fiscal fourth quarter, NDSN’s gross margin decreased approximately 140 basis points due to cost inflation. Supply-chain disruptions and labor challenges are added concerns for the company.
Foreign exchange headwinds are weighing on Nordson’s top line. Forex woes had an adverse impact of 5% on sales in fiscal 2022. For the first quarter of fiscal 2023, Nordson expects unfavorable foreign currency movements to weigh on sales by approximately 4% and 7% on earnings. For fiscal 2023, foreign currency headwinds are expected to hurt earnings by around 3%. Additionally, the company anticipates a volatile demand environment in the latter half of 2023.
Zacks Rank & Key Picks
Nordson carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are as follows:
MRC Global has an estimated earnings growth rate of 325.9% and 37.4% for 2022 and 2023, respectively. Shares of the company have rallied 19.9% in the past six months.
IDEX Corporation (IEX - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 5.7%, on average.
IDEX has an estimated earnings growth rate of 28.4% and 6.1% for 2022 and 2023, respectively. Shares of IEX have gained 27.1% in the past six months.
EnerSys (ENS - Free Report) delivered a trailing four-quarter earnings surprise of 27.1%, on average. ENS presently carries a Zacks Rank of 2.
EnerSys has an estimated earnings growth rate of 7.2% and 26.3% for fiscal 2023 and 2024, respectively. The stock surged 27.1% in the past six months.
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Nordson (NDSN) Stock Holds Promise Despite Cost Headwinds
Nordson Corporation (NDSN - Free Report) is benefiting from strength in its Industrial Precision Solution segment due to robust demand in the polymer processing product line and steady growth in industrial coating products and packaging product lines in the food and beverage industry, as well as in the industrial end markets. The NDC Technologies acquisition is also boosting the unit’s performance. Revenues from the segment increased 7.2% year over year in fiscal 2022.
Robust growth in the biopharma fluid component product line is driving the Medical and fluid solution segment’s performance. Revenues from the unit rose 7.6% in fiscal 2022. Strength in the test and inspection, and electronics dispense product lines is aiding the Advanced Technology Solution segment, revenues of which jumped 20.7%. Organic sales growth due to volume increases and pricing actions is supporting Nordson’s growth. For fiscal 2023, the company expects sales to increase 1-7% from the fiscal 2022 figure.
Nordson has been capitalizing on acquisitions by penetrating unexplored markets and expanding its product lines. In November 2022, the company acquired CyberOptics Corporation, expanding its semiconductor test and inspection capabilities.
In November 2021, the company acquired NDC, expanding its test and inspection platform. The buyout has enabled Nordson to strengthen its position in the electronics end market, and expand into new end markets, including film extrusion & converting, consumer non-durable, cable & tubing, and energy storage. The NDC acquisition has boosted fiscal 2022 sales by 3%.
Nordson Corporation Price and Consensus
Nordson Corporation price-consensus-chart | Nordson Corporation Quote
Nordson has been committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In September 2022, the company’s board authorized the repurchase of up to an additional $500 million shares. This is on top of $160 million remaining under its existing share repurchase authorization, approved in 2018.
In fiscal 2022, Nordson paid out dividends of $125.9 million, up 28.9% year over year. The company also bought back shares worth more than $260 million (compared with $61 million in fiscal 2021) in the same period. In August 2022, NDSN hiked its quarterly dividend by 27%, marking its 59th consecutive year of dividend increase.
Despite the positives, Nordson has been dealing with the adverse impacts of a high cost of sales due to rising inflation. Cost of sales increased 12.1% year over year in fiscal 2022. The escalating cost of sales is hurting the company’s margins. In the fiscal fourth quarter, NDSN’s gross margin decreased approximately 140 basis points due to cost inflation. Supply-chain disruptions and labor challenges are added concerns for the company.
Foreign exchange headwinds are weighing on Nordson’s top line. Forex woes had an adverse impact of 5% on sales in fiscal 2022. For the first quarter of fiscal 2023, Nordson expects unfavorable foreign currency movements to weigh on sales by approximately 4% and 7% on earnings. For fiscal 2023, foreign currency headwinds are expected to hurt earnings by around 3%. Additionally, the company anticipates a volatile demand environment in the latter half of 2023.
Zacks Rank & Key Picks
Nordson carries a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are as follows:
MRC Global Inc. (MRC - Free Report) presently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of approximately 103%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
MRC Global has an estimated earnings growth rate of 325.9% and 37.4% for 2022 and 2023, respectively. Shares of the company have rallied 19.9% in the past six months.
IDEX Corporation (IEX - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 5.7%, on average.
IDEX has an estimated earnings growth rate of 28.4% and 6.1% for 2022 and 2023, respectively. Shares of IEX have gained 27.1% in the past six months.
EnerSys (ENS - Free Report) delivered a trailing four-quarter earnings surprise of 27.1%, on average. ENS presently carries a Zacks Rank of 2.
EnerSys has an estimated earnings growth rate of 7.2% and 26.3% for fiscal 2023 and 2024, respectively. The stock surged 27.1% in the past six months.