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

Nordson Corporation NDSN has been benefiting from strength in the Industrial Precision Solutions segment, driven by growing popularity for its industrial coatings, polymer processing and non-woven product lines. Solid demand for the medical interventional solutions product line is aiding the Medical and Fluid Solutions segment’s revenues. In the quarters ahead, investments in automation, artificial intelligence, memory and electronic product innovation are expected to drive Nordson’s growth.

The company intends to strengthen and expand its businesses through buyouts. Nordson’s acquisition of ARAG Group in August 2023 expanded its core capabilities in precision dispensing technology, helping the company foray into the rapidly growing precision agriculture end-market. Also, the buyout of CyberOptics Corporation in November 2022 expanded its semiconductor test and inspection capabilities. In the first quarter of fiscal 2024 (ended January 2024), acquired assets boosted the company’s total revenues by 5.4%.

NDSN remains committed to rewarding shareholders through dividend payouts and share repurchases. In the first quarter of fiscal 2024, it paid out dividends of $38.9 million and bought back shares worth $7.4 million. Also, the company hiked its dividend by 5% to 68 cents per share in August 2023.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In the past three months, shares of this Zacks Rank #3 (Hold) company have gained 5.5% compared with the industry’s 12.3% growth.

However, Nordson has been witnessing weakness in the Advanced Technology Solutions segment. A decrease in demand for electronics dispensing product lines, serving in the cyclical semiconductor end market, is weighing on the segment.

Also, rising costs and expenses, if not controlled, might pose a threat to its bottom line. For instance, cost of sales increased 1.1% year over year in the fiscal first quarter owing to higher input costs. Also, in the quarter, selling and administrative expenses increased 2.4% year over year due to increasing acquisition costs.

Key Picks

We have highlighted three better-ranked stocks from the same space, namely Applied Industrial Technologies AIT, Illinois Tool Works ITW and IDEX Corporation IEX. While Applied Industrial currently sports a Zacks Rank #1 (Strong Buy), Illinois Tool and IDEX carry a Zacks Rank of 2 (Buy) each.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Industrial delivered a trailing four-quarter average earnings surprise of 10.4%. In the past 60 days, the Zacks Consensus Estimate for AIT’s 2024 earnings has increased 2.5%.

Illinois Tool delivered a trailing four-quarter average earnings surprise of 3.3%. In the past 60 days, the Zacks Consensus Estimate for ITW’s 2024 earnings has inched up 0.1%.

IDEX delivered a trailing four-quarter average earnings surprise of 5.2%. In the past 60 days, the Zacks Consensus Estimate for IEX’s 2024 earnings has increased 1.7%.

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Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report

Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report

IDEX Corporation (IEX) : Free Stock Analysis Report

Nordson Corporation (NDSN) : Free Stock Analysis Report

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