Nordson Corp Struggles Despite Strong Q3 Earnings Performance

Nordson Corporation has underperformed compared to the broader market and its peers over the past year. However, a recent Q3 earnings report showed a 2% increase in sales, and analysts have rating it as a 'Moderate Buy' amidst consistent growth expectations.

Date: 01-12-2024

AI Rating: 6

Nordson Corporation has experienced underperformance relative to the S&P 500 Index and the Industrial Select Sector SPDR Fund over the past year. Specifically, with a gain of only 12.2% against the S&P 500’s 32.6% returns and down 1.2% in 2024 compared to 26.5% for the index, it highlights significant lagging performance.

Despite this underperformance, there are positive indicators in its recent financial results. Nordson's price climbed 3.3% on the back of its Q3 earnings showing sales increased by 2% year-over-year to $661.6 million. This growth was primarily attributed to inorganic growth, albeit organic sales did experience a decline of about 1% due to weaker demand in certain areas.

Significantly, while the company's GAAP net income fell by 8.3% year-over-year to $117.3 million, the expected EPS growth for the fiscal year stands at 5.8%, reaching $9.55. This projection of EPS growth is critical as it signifies potential resilience in profit margins moving forward.

The earnings surprise history adds a positive note; Nordson has consistently exceeded analyst expectations in the last four quarters, pointing to strong operational performance despite some challenges. Furthermore, a consensus rating of 'Moderate Buy' from eight analysts, including three 'Strong Buy' ratings, suggests a degree of optimism and confidence in the company's long-term prospects.

Baird Capital's recent increase in Nordson's price target from $272 to $287 reflects confidence in the company's ongoing strong growth outlook, particularly in its Advanced Technology Solutions segment, which has shown robust margins and revenue growth. The average mean price target of $277.20, presenting a 6.2% premium and a street-high target of $295 indicating potential upside of 13%, suggests room for positive movement in stock prices.

Stocks: NDSN