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Here's Why Investors Should Retain Nordson (NDSN) Stock

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Nordson Corporation (NDSN - Free Report) is gaining from strong customer demand for medical interventional solutions, polymer processing, and test and inspection product lines despite increasing costs and forex woes. The company is also facing weakness in the Industrial Precision Solutions segment due to softness in product assembly and demand decrease for non-woven product lines in the Asia region.

Key Factors Driving NDSN

Investments in Product Innovation: Investments in automation, artificial intelligence, memory and electronic product innovation should drive Nordson’s growth. The company’s diversified business structure is a boon. The company expects adjusted earnings to be $8.90-$9.05 per share for fiscal 2023 (ending October 2023). This compares favorably with the fiscal 2022 (ended October 2022) figure of earnings of $8.81 per share.

Expansion Efforts: Nordson has been strengthening its business through acquisitions. The company completed the acquisition of ARAG Group and its subsidiaries in August 2023 which have been added to NDSN’s Industrial Precision Solutions segment.  The buyout bolstered Nordson’s core capabilities in the precision dispense technology, helping it foray into the rapidly growing, precision agriculture end market. In November 2022, Nordson acquired CyberOptics Corporation, expanding its semiconductor test and inspection capabilities. In the first nine months of fiscal 2023 (ended July 2023), acquired assets boosted the company’s total revenues by 2.6%.

Rewards to Shareholders: Nordson continues to increase shareholders’ value through dividend payments and share buybacks. In the first nine months of fiscal 2023, the company paid out dividends of $111.5 million, up 25.8% year over year. In the same period, it bought back shares worth $78.2 million. The quarterly dividend rate was hiked 5% to 68 cents per share in August 2023. This marked the company’s 60th consecutive year of dividend increase.

In light of the above-mentioned positives, we believe, investors should retain NDSN stock for now, as suggested by its current Zacks Rank #3 (Hold). Shares of the company have gained 8.9% in the past year.

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Stocks to Consider

Some better-ranked companies from the Industrial Products sector are discussed below:

Caterpillar Inc. (CAT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.

CAT’s earnings surprise in the last four quarters was 18.5%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased 11.1% for 2023. The stock has gained 58.5% in the past year.

A. O. Smith Corp. (AOS - Free Report) presently sports a Zacks Rank of 1. AOS’ earnings surprise in the last four quarters was 10.5%, on average.

In the past 60 days, estimates for A. O. Smith’s earnings have increased 2.9% for 2023. The stock has gained 31.6% in the past year.

Enersys (ENS - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 10.3%, on average.

In the past 60 days, estimates for EnerSys’ 2023 (ending March 2024) earnings have increased 0.1%. The stock has gained 73.7% in the past year.

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