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Here's Why You Should Avoid Investing in Nordson (NDSN) Now
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Nordson Corporation (NDSN - Free Report) has been dealing with the adverse impacts of high cost of sales due to rising inflation. Cost of sales increased 12.1% year over year in fiscal 2022. The same increased 4.7% in the fiscal first quarter. Supply-chain disruptions and labor challenges are added concerns for the company. These headwinds are weighing on its margin performance. In the fiscal first quarter, NDSN’s gross margin decreased by approximately 190 basis points year over year.
This Zacks Rank #4 (Sell) company is exposed to unfavorable movements in foreign currencies due to its diversified geographical presence. Foreign exchange headwinds had an adverse impact of 5% on sales in fiscal 2022. The same hurt total revenues by 4% in the fiscal first quarter.
The Industrial Precision Solution segment is the most exposed to foreign currency headwinds as it is the most globally diverse. In the fiscal first quarter, unfavorable currency movements had an impact of 4% on the segment's revenues.
Nordson is seeing weakness in the China region due to labor shortages as well as the spread of coronavirus in the country. This has been a drag on the Industrial Precision Solution segment. Revenues from the segment declined 3.8% year over year in the first quarter of fiscal 2023.
The softening of semiconductor orders is concerning for Nordson’s Advanced Technology Solutions segment. Weakness in the medical fluid components product lines is weighing on the Medical and Fluid Solutions segment (revenues declined 2.8% year over year in the fiscal first quarter).
Amid these headwinds, Nordson has lowered its fiscal 2023 forecast. It now expects adjusted earnings of $8.75-$9.50 per share compared with $8.75-$10.10 anticipated earlier. Sales are expected to increase 0-3% year over year compared with 1-7% rise predicted earlier.
Grappling with segmental weaknesses, supply chain issues and cost inflation, shares of NDSN have slipped 1.9% in the past six months compared with the industry’s increase of 16.8%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Deere has an estimated earnings growth rate of 28.1% for the current fiscal year. The stock has gained 15.7% in the past six months.
Ingersoll Rand (IR - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a four-quarter earnings surprise of 8.5%, on average.
Ingersoll Rand has an estimated earnings growth rate of approximately 3% for the current year. The stock has rallied 21.6% in the past six months.
Parker-Hannifin Corporation (PH - Free Report) presently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 9.1%, on average.
Parker-Hannifin has an estimated earnings growth rate of 3.7% for the current fiscal year. The stock has gained 32.8% in the past six months.
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Here's Why You Should Avoid Investing in Nordson (NDSN) Now
Nordson Corporation (NDSN - Free Report) has been dealing with the adverse impacts of high cost of sales due to rising inflation. Cost of sales increased 12.1% year over year in fiscal 2022. The same increased 4.7% in the fiscal first quarter. Supply-chain disruptions and labor challenges are added concerns for the company. These headwinds are weighing on its margin performance. In the fiscal first quarter, NDSN’s gross margin decreased by approximately 190 basis points year over year.
This Zacks Rank #4 (Sell) company is exposed to unfavorable movements in foreign currencies due to its diversified geographical presence. Foreign exchange headwinds had an adverse impact of 5% on sales in fiscal 2022. The same hurt total revenues by 4% in the fiscal first quarter.
The Industrial Precision Solution segment is the most exposed to foreign currency headwinds as it is the most globally diverse. In the fiscal first quarter, unfavorable currency movements had an impact of 4% on the segment's revenues.
Nordson is seeing weakness in the China region due to labor shortages as well as the spread of coronavirus in the country. This has been a drag on the Industrial Precision Solution segment. Revenues from the segment declined 3.8% year over year in the first quarter of fiscal 2023.
The softening of semiconductor orders is concerning for Nordson’s Advanced Technology Solutions segment. Weakness in the medical fluid components product lines is weighing on the Medical and Fluid Solutions segment (revenues declined 2.8% year over year in the fiscal first quarter).
Amid these headwinds, Nordson has lowered its fiscal 2023 forecast. It now expects adjusted earnings of $8.75-$9.50 per share compared with $8.75-$10.10 anticipated earlier. Sales are expected to increase 0-3% year over year compared with 1-7% rise predicted earlier.
Grappling with segmental weaknesses, supply chain issues and cost inflation, shares of NDSN have slipped 1.9% in the past six months compared with the industry’s increase of 16.8%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks within the broader Industrial Products sector are as follows:
Deere & Company (DE - Free Report) currently sports a Zacks Rank #1 (Strong Buy). The company pulled off a trailing four-quarter earnings surprise of 4.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
Deere has an estimated earnings growth rate of 28.1% for the current fiscal year. The stock has gained 15.7% in the past six months.
Ingersoll Rand (IR - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a four-quarter earnings surprise of 8.5%, on average.
Ingersoll Rand has an estimated earnings growth rate of approximately 3% for the current year. The stock has rallied 21.6% in the past six months.
Parker-Hannifin Corporation (PH - Free Report) presently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings surprise of 9.1%, on average.
Parker-Hannifin has an estimated earnings growth rate of 3.7% for the current fiscal year. The stock has gained 32.8% in the past six months.