It has been about a month since the last earnings report for Nordson (NDSN Quick QuoteNDSN - Free Report) . Shares have added about 0.1% 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 drivers.

Nordson Q4 Earnings & Revenues Surpass Estimates

Nordson reported adjusted earnings of $2.44 per share, which beat the Zacks Consensus Estimate of $2.33. The bottom line increased 29.8% year over year. Revenues of $683.6 million increased 14.1% year over year and also surpassed the Zacks Consensus Estimate of $654 million.

Organic sales expanded 18%, driven by healthy end-market businesses, mostly in medical and electronics. Acquisitions/divestitures had a positive impact of 4% while foreign currency translation had a negative impact of 8%.

On a regional basis, revenues from the Asia Pacific region increased 15.7% to $214.1 million. Revenues generated from Europe increased 1.3% to $165.7 million, while the metric in the Americas increased 21.2% to $303.7 million.

Nordson started reporting revenues under three segments effective Aug 1, 2022. The segments are Industrial Precision Solutions, Medical and Fluid Solutions, and Advanced Technology Solutions. A brief snapshot of the segmental sales is provided below:

Revenues from Industrial Precision Solutions amounted to $355.7 million in the quarter under review, up 13.2% from the year-ago fiscal quarter’s level. The segment contributed 52% to NDSN’s top line in the quarter.

Organic sales increased 15.5% from the year-ago fiscal quarter’s level. Acquisitions/divestitures had a positive impact of 7.4%, while foreign currency translation had a negative impact of 9.7%.

Revenues from Medical and Fluid Solutions amounted to $181.3 million in the quarter under review, up 10.9% from the year-ago fiscal quarter’s level. The segment contributed 26.5% to NDSN’s top line in the reported quarter.

Organic sales increased 14.6% from the year-ago fiscal quarter’s level, while foreign currency translation had a negative impact of 3.7%.

Advanced Technology Solutions’ sales were $146.6 million, up 20.7% from the year-ago fiscal quarter’s figure. The metric represented 21.5% of Nordson’s revenues in the period.

Organic sales increased 27.8% from the year-ago fiscal quarter’s level, while foreign currency translation had a negative impact of 7.1%.

Margin Profile

In the reported quarter, Nordson’s cost of sales increased 19.5% from the year-ago fiscal quarter’s level to $320.4 million. The cost of sales represented 46.9% of net sales. Gross profit was $363.2 million, up 9.7% from the year-ago fiscal quarter’s level. The gross margin contracted 220 basis points (bps) to 53.1%. NDSN suffered the adverse impacts of supply-chain woes and labor shortages.

Selling and administrative expenses increased 3.3% year over year to $185.6 million and represented 27.2% of net sales. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $202.3 million, the margin being 30%. Adjusted operating income in the reported quarter was $177.6 million, increasing 17.3% year on year. Adjusted operating margin increased 100 bps to 26%.

Net interest expenses totaled $5.1 million, reflecting a 13.3% decrease from the year-ago fiscal quarter’s level.

Balance Sheet & Cash Flow

At the time of exiting the fiscal fourth quarter, Nordson’s cash and cash equivalents reached $163.5 million, decreasing 45.5% from the $300 million recorded at the end of the fourth quarter of fiscal 2021. Long-term debt was $345.3 million, reflecting a 55.8% decline from $781.7 million.

In fiscal 2022, NDSN generated net cash of $513.1 million from operating activities, down 6% from the last fiscal year’s tally. Capital invested in purchasing property, plant and equipment totaled $51.4 million, increasing 34.2% from the year-ago fiscal period’s figure.

Dividends/Share Buyback

In fiscal 2022, Nordson paid out dividends amounting to $125.9 million, up 28.9% from $97.7 million in the same period of the previous fiscal year.

Nordson’s purchase of treasury shares amounted to $262.9 million in fiscal 2022, increasing from $61 million in the last fiscal year.

Outlook

Nordson anticipates solid orders and backlog (about $1 billion including the acquired CyberOptics backlog) to be beneficial in the first quarter of fiscal 2023 (ending January 2023).

For the first quarter of fiscal 2023, Nordson expects revenues to be $605-$630 million. The adjusted earnings are anticipated to be $1.85-$2.00 per share.

For fiscal 2023 (ending October 2023), Nordson anticipates adjusted earnings to be $8.75-$10.10 per share. Sales are expected to increase 1-7% from the previous fiscal year’s reported number.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -8.53% due to these changes.

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 a D. Following the exact same course, 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 #3 (Hold). We expect an in-line return from the stock in the next few months.