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Nordson (NDSN) Announces Plan to Reorganize into 2 Businesses

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Nordson Corporation (NDSN - Free Report) yesterday announced its business realignment plans. Concurrently, it mentioned that it is taking effective measures to ensure workers’ safety and meeting customers’ demands amid the coronavirus outbreak.

The company believes that the realignment of businesses will help it achieve its long-term priorities — boosting organic growth, buyouts, talent development and gaining from Nordson Business System.

It is worth mentioning that Nordson’s share price increased 5.08% yesterday, ending the trading session at $138.59.

Inside the Headlines

As noted, the company intends on combining its existing Industrial Coating Systems (“ICS”) and Adhesive Dispensing Systems (“ADS”) businesses into the Industrial Precision Solutions (“IPS”) business. The business will be headed by Gregory P. Merk.

Notably, revenues of ICS and ADS businesses together totaled $1.2 billion in fiscal 2019 (ended October 2019).

The IPS business will work on providing processing and dispensing technology to customers in multiple markets — including non-durables, industrial and consumer durables. The standard and customized products help in dispensing sealants, paint, adhesives, coatings and other materials.

The rest of Nordson’s business — with customers primarily in medical, electronics and general industrial end markets — will be under Advanced Technology Solutions (“ATS”). Notably, the ATS business will look after providing services for inspection, surface treatment and controlled dispensing of material. Also, products like catheters, fluid-connection components, cartridges, balloons, tubing and plastic-molded syringes (single-use) will be made available through ATS. The business will be headed by Jeffrey A. Pembroke.

The business generated revenues of $986 million in fiscal 2019.

Nordson intends on bringing its financial reporting on par with its realigned business structure.

Zacks Rank, Earnings Estimates and Price Performance

The company, with a market capitalization of $7.6 billion, currently carries a Zacks Rank #4 (Sell). Persistent weakness in the electronics end markets remains concerning. Also, rising costs and unfavorable movements in foreign currencies might hurt.

Shares of Nordson have moved down 14.9% compared with the industry’s 25% decline in the past three months.

The Zacks Consensus Estimate for the company’s earnings is pegged at $6.16 for fiscal 2020 (ending October 2020) and $7.06 for fiscal 2021 (ending October 2021). Estimates reflect a decline of 2.4% for both years from the respective 60-day-ago figures.

Nordson Corporation Price and Consensus


Nordson Corporation Price and Consensus

Nordson Corporation price-consensus-chart | Nordson Corporation Quote

Stocks to Consider

Three better-ranked stocks in the Zacks Industrial Products sector are Tennant Company (TNC - Free Report) , Broadwind Energy, Inc. (BWEN - Free Report) and Tetra Tech, Inc. (TTEK - Free Report) . While Tennant sports a Zacks Rank #1 (Strong Buy) at present, Broadwind and Tetra Tech carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for Tennant and Tetra Tech have improved for the current year and have been unchanged for Broadwind. Further, average earnings surprise for the last four quarters was a positive 26.60% for Tennant, 10.42% for Broadwind and 8.31% for Tetra Tech.

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