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Reasons Why You Should Avoid Betting on Nordson (NDSN) Stock
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Nordson Corporation (NDSN - Free Report) has failed to impress investors with its recent operational performance on account of weakness in the Advanced Technology Solutions segment and rising operating costs. These factors are likely to impede NDSN’s earnings in the quarters ahead.
Let’s discuss the factors, which are likely to continue taking a toll on this Zacks Rank #4 (Sell) company.
Business Weakness: Softness in the Advanced Technology Solutions segment raises concerns for the company. A decrease in demand for electronics dispensing product lines, serving in the cyclical semiconductor end market, is weighing on the Advanced Technology Solutions segment. The segment’s revenues decreased 17.6% in the fiscal first quarter (ended January 2024).
Steep Costs: Nordson has been dealing with the adverse impacts of the high cost of sales due to rising input costs. Cost of sales increased 1.1% year over year in the first quarter due to higher input costs. Also, in the first quarter, the company’s selling and administrative expenses increased 2.4% year over year due to increasing acquisition costs. Escalating costs pose a threat to Nordson’s bottom line.
Forex Woes: Nordson’s international presence keeps the company exposed to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar may require the company to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry. Also, being the most globally diverse, the Industrial Precision solution segment is highly exposed to foreign currency headwinds.
Southbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for NDSN’s fiscal 2024 (ending October 2024) earnings has been revised 0.2% downward.
Price Performance: Shares of Nordson have gained 28.7% in the past year, underperforming the industry’s 32.9% rise.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
BDC’s earnings estimates have increased 8.3% for 2024 in the past 60 days. Shares of Belden have risen 11.3% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 8.2%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.2% in the past 60 days. The stock has gained 52.3% in the past year.
Greif, Inc. (GEF - Free Report) presently carries a Zacks Rank of 2. GEF delivered a trailing four-quarter earnings surprise of 150.6%, on average.
GEF’s earnings estimates have increased 9% for fiscal 2024 in the past 60 days. Its shares have risen 1.4% in the past year.
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Reasons Why You Should Avoid Betting on Nordson (NDSN) Stock
Nordson Corporation (NDSN - Free Report) has failed to impress investors with its recent operational performance on account of weakness in the Advanced Technology Solutions segment and rising operating costs. These factors are likely to impede NDSN’s earnings in the quarters ahead.
Let’s discuss the factors, which are likely to continue taking a toll on this Zacks Rank #4 (Sell) company.
Business Weakness: Softness in the Advanced Technology Solutions segment raises concerns for the company. A decrease in demand for electronics dispensing product lines, serving in the cyclical semiconductor end market, is weighing on the Advanced Technology Solutions segment. The segment’s revenues decreased 17.6% in the fiscal first quarter (ended January 2024).
Steep Costs: Nordson has been dealing with the adverse impacts of the high cost of sales due to rising input costs. Cost of sales increased 1.1% year over year in the first quarter due to higher input costs. Also, in the first quarter, the company’s selling and administrative expenses increased 2.4% year over year due to increasing acquisition costs. Escalating costs pose a threat to Nordson’s bottom line.
Forex Woes: Nordson’s international presence keeps the company exposed to the risk of adverse currency fluctuations. This is because a strengthening U.S. dollar may require the company to either raise prices or contract profit margins in locations outside the United States. Thus, adverse currency movements are a worry. Also, being the most globally diverse, the Industrial Precision solution segment is highly exposed to foreign currency headwinds.
Southbound Estimate Revisions: In the past 60 days, the Zacks Consensus Estimate for NDSN’s fiscal 2024 (ending October 2024) earnings has been revised 0.2% downward.
Price Performance: Shares of Nordson have gained 28.7% in the past year, underperforming the industry’s 32.9% rise.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Belden Inc. (BDC - Free Report) presently sports a Zacks Rank #1 (Strong Buy) and has a trailing four-quarter earnings surprise of 14.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
BDC’s earnings estimates have increased 8.3% for 2024 in the past 60 days. Shares of Belden have risen 11.3% in the past year.
Applied Industrial Technologies, Inc. (AIT - Free Report) currently carries a Zacks Rank #2 (Buy). It has a trailing four-quarter average earnings surprise of 8.2%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.2% in the past 60 days. The stock has gained 52.3% in the past year.
Greif, Inc. (GEF - Free Report) presently carries a Zacks Rank of 2. GEF delivered a trailing four-quarter earnings surprise of 150.6%, on average.
GEF’s earnings estimates have increased 9% for fiscal 2024 in the past 60 days. Its shares have risen 1.4% in the past year.