It has been about a month since the last earnings report for Nordson NDSN. Shares have added about 1.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Nordson due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Nordson Beats on Q3 Earnings, Sales Rise Y/Y

Nordson’s third-quarter fiscal 2024 (ended Jul 31, 2024) adjusted earnings of $2.41 per share surpassed the Zacks Consensus Estimate of $2.33. The bottom line decreased 6% year over year.

Quarterly Results of Nordson

Nordson’s revenues were $661.6 million, up 2% from the year-ago fiscal quarter’s number driven by solid momentum in the Industrial Precision Solutions segment. Revenues beat the Zacks Consensus Estimate of $655 million.

Organic sales declined 1% year over year due to softness in the electronics and medical product lines. Acquisitions had a positive impact of 4% while foreign currency translation had a negative impact of 1%.

On a regional basis, revenues from the Asia Pacific region increased 2.4% year over year to $195.2 million. Revenues generated from Europe increased 7.1% to $179.4 million while the metric in the Americas decreased 1.2% to $287 million.

Nordson reports revenues under three segments. The segments are Industrial Precision Solutions, Medical and Fluid Solutions and Advanced Technology Solutions. A brief snapshot of the segmental sales is provided below:

Revenues from Industrial Precision Solutions amounted to $370.6 million, up 9.6% from the year-ago fiscal quarter’s level. The segment contributed 56% to NORDSON’s top line in the quarter.

Organic sales increased 3.6% from the year-ago fiscal quarter’s level. Acquisitions had a positive impact of 7.4% while foreign currency translation had a negative impact of 1.4%.

Revenues from Medical and Fluid Solutions amounted to $166.7 million, down 2.4% from the year-ago fiscal quarter’s level. The segment contributed 25.2% to Nordson’s top line.

Organic sales decreased 2% from the year-ago fiscal quarter’s level. Foreign currency translation had a negative impact of 0.4%.

Advanced Technology Solutions’ sales were $124.3 million, down 10.9% from the year-ago fiscal quarter’s figure. The metric represented 18.8% of Nordson’s revenues in the period.

Organic sales decreased 10.2% from the year-ago fiscal quarter’s level. Foreign currency translation had a negative impact of 0.7%.

Margin Profile

Nordson’s cost of sales increased 1.5% from the year-ago fiscal quarter’s level to $292.6 million. Gross profit was $369 million, up 2.4% from the year-ago fiscal quarter’s level. The gross margin increased 30 basis points (bps) to 55.8%.

Selling and administrative expenses increased 6.7% year over year to $201.9 million. Adjusted EBITDA was $208.1 million, the margin being 31%. Operating income was $167.1 million, down 2.3% year on year. Operating margin of 25.3% decreased 110 bps from the year-ago period.

Net interest expenses totaled $17.8 million, reflecting a 54.8% increase from the year-ago fiscal quarter’s level.

Balance Sheet & Cash Flow

At the time of exiting the third quarter, Nordson’s cash and cash equivalents were $165.3 million compared with $115.7 million recorded at the end of the fourth quarter of fiscal 2023. Long-term debt was $1.4 billion compared with $1.6 billion recorded at the end of fourth-quarter fiscal 2023.

In the first nine months of fiscal 2024, Nordson generated net cash of $459.8 million from operating activities, down 3.8% from the last fiscal year period’s tally. Capital invested in purchasing property, plant and equipment totaled $43.8 million, up 81% from the year-ago fiscal period.

Dividends/Share Buyback

In the first nine months of fiscal 2024, Nordson paid out dividends of $116.8 million, up 4.8% from $111.5 million in the same period of the previous fiscal year.

Treasury purchase shares amounted to $34.1 million in the first nine months of the fiscal year, down from $78.2 million in the last fiscal year.

Outlook

For fiscal 2024 (ending October 2024), Nordson anticipates adjusted earnings to be in the range of $9.45-$9.65 per share compared with $9.35-$9.75 predicted earlier. Sales are expected to be in the range of $2.665-$2.705 billion compared with $2.630-$2.680 billion anticipated earlier.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Nordson has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren’t focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nordson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Nordson belongs to the Zacks Manufacturing – General Industrial industry. Another stock from the same industry, Applied Industrial Technologies AIT, has gained 10.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.

Applied Industrial Technologies reported revenues of $1.16 billion in the last reported quarter, representing a year-over-year change of +0.2%. EPS of $2.64 for the same period compares with $2.35 a year ago.

For the current quarter, Applied Industrial Technologies is expected to post earnings of $2.28 per share, indicating a change of -4.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.5% over the last 30 days.

Applied Industrial Technologies has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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