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Nordson (NDSN) Down 4.5% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Nordson (NDSN - Free Report) . Shares have lost about 4.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nordson due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Nordson's Q2 Earnings Top Estimates, Revenues Rise Y/Y
Nordson’s second-quarter fiscal 2024 (ended Apr 30, 2024) adjusted earnings of $2.34 per share surpassed the Zacks Consensus Estimate of $2.30. The bottom line increased 13.3% year over year.
Revenue Details
Nordson’s revenues were $650.6 million, which were up 0.1% from the year-ago fiscal quarter’s number due to solid momentum in the Industrial Precision Solutions and Medical and Fluid Solutions segments. Revenues missed the Zacks Consensus Estimate of $658 million.
Organic sales declined 3.7% year over year due to softness in electronics product lines. Acquisitions/divestitures had a positive impact of 4.5% while foreign currency translation had a negative impact of 0.7%.
On a regional basis, revenues from the Asia Pacific region decreased 14.4% year over year to $174.1 million. Revenues generated from Europe increased 8.4% to $182.1 million while the metric in the Americas increased 5.6% to $294.4 million.
Nordson started reporting revenues under three segments effective Aug 1, 2022. 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 $367 million, up 9.3% from the year-ago fiscal quarter’s level. The segment contributed 56.4% to NDSN’s top line in the quarter.
Organic sales increased 1.5% from the year-ago fiscal quarter’s level. Foreign currency translation had a negative impact of 0.8%.
Revenues from Medical and Fluid Solutions amounted to $169 million, up 1.5% from the year-ago fiscal quarter’s level. The segment contributed 26% to NDSN’s top line.
Organic sales increased 1.8% from the year-ago fiscal quarter’s level. Foreign currency translation had a negative impact of 0.3%.
Advanced Technology Solutions’ sales were $114.9 million, down 22.4% from the year-ago fiscal quarter’s figure. The metric represented 17.6% of Nordson’s revenues in the period.
Organic sales decreased 21.6% from the year-ago fiscal quarter’s level. Foreign currency translation had a negative impact of 0.8%.
Margin Profile
Nordson’s cost of sales decreased 4.5% from the year-ago fiscal quarter’s level to $284.8 million. Gross profit was $365.9 million, up 3.9% from the year-ago fiscal quarter’s level. The gross margin increased 200 basis points (bps) to 56.2%.
Selling and administrative expenses increased 9.8% year over year to $197.3 million. EBITDA was $203.4 million, the margin being 31%. Operating income was $168.6 million, up 2.3% year on year. Operating margin of 25.9% decreased 60 bps from the year-ago period.
Net interest expenses totaled $18.6 million, reflecting a 2% increase from the year-ago fiscal quarter’s level.
Balance Sheet & Cash Flow
At the time of exiting the second quarter, Nordson’s cash and cash equivalents were $125.4 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 million recorded at the end of fourth-quarter fiscal 2023.
In the first six months of fiscal 2024, NDSN generated net cash of $295 million from operating activities, up 2.5% from the last fiscal year’s tally. Capital invested in purchasing property, plant and equipment totaled $21.9 million, up 42.7% from the year-ago fiscal period.
Dividends/Share Buyback
In the first six months of fiscal 2024, Nordson paid out dividends amounting to $77.8 million, up 4.5% from $74.5 million in the same period of the previous fiscal year.
Nordson’s treasury purchase shares amounted to $7.9 million in the first six months of fiscal 2024, which were down from $54.4 million in the last fiscal year.
Outlook
For the third quarter, NDSN expects sales in the range of $645-$670 million and adjusted earnings in the range of $2.25-$2.40 per share.
For fiscal 2024 (ending October 2024), Nordson anticipates adjusted earnings in the range of $9.35-$9.75 per share compared with $10.00-$10.50 per share predicted earlier. Sales are expected to increase in the range of 0-2% from the previous fiscal year’s reported number compared with an increase of 4-7% anticipated earlier.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -14.98% due to these changes.
VGM Scores
Currently, Nordson has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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. It's no surprise Nordson has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Nordson (NDSN) Down 4.5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Nordson (NDSN - Free Report) . Shares have lost about 4.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nordson due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Nordson's Q2 Earnings Top Estimates, Revenues Rise Y/Y
Nordson’s second-quarter fiscal 2024 (ended Apr 30, 2024) adjusted earnings of $2.34 per share surpassed the Zacks Consensus Estimate of $2.30. The bottom line increased 13.3% year over year.
Revenue Details
Nordson’s revenues were $650.6 million, which were up 0.1% from the year-ago fiscal quarter’s number due to solid momentum in the Industrial Precision Solutions and Medical and Fluid Solutions segments. Revenues missed the Zacks Consensus Estimate of $658 million.
Organic sales declined 3.7% year over year due to softness in electronics product lines. Acquisitions/divestitures had a positive impact of 4.5% while foreign currency translation had a negative impact of 0.7%.
On a regional basis, revenues from the Asia Pacific region decreased 14.4% year over year to $174.1 million. Revenues generated from Europe increased 8.4% to $182.1 million while the metric in the Americas increased 5.6% to $294.4 million.
Nordson started reporting revenues under three segments effective Aug 1, 2022. 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 $367 million, up 9.3% from the year-ago fiscal quarter’s level. The segment contributed 56.4% to NDSN’s top line in the quarter.
Organic sales increased 1.5% from the year-ago fiscal quarter’s level. Foreign currency translation had a negative impact of 0.8%.
Revenues from Medical and Fluid Solutions amounted to $169 million, up 1.5% from the year-ago fiscal quarter’s level. The segment contributed 26% to NDSN’s top line.
Organic sales increased 1.8% from the year-ago fiscal quarter’s level. Foreign currency translation had a negative impact of 0.3%.
Advanced Technology Solutions’ sales were $114.9 million, down 22.4% from the year-ago fiscal quarter’s figure. The metric represented 17.6% of Nordson’s revenues in the period.
Organic sales decreased 21.6% from the year-ago fiscal quarter’s level. Foreign currency translation had a negative impact of 0.8%.
Margin Profile
Nordson’s cost of sales decreased 4.5% from the year-ago fiscal quarter’s level to $284.8 million. Gross profit was $365.9 million, up 3.9% from the year-ago fiscal quarter’s level. The gross margin increased 200 basis points (bps) to 56.2%.
Selling and administrative expenses increased 9.8% year over year to $197.3 million. EBITDA was $203.4 million, the margin being 31%. Operating income was $168.6 million, up 2.3% year on year. Operating margin of 25.9% decreased 60 bps from the year-ago period.
Net interest expenses totaled $18.6 million, reflecting a 2% increase from the year-ago fiscal quarter’s level.
Balance Sheet & Cash Flow
At the time of exiting the second quarter, Nordson’s cash and cash equivalents were $125.4 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 million recorded at the end of fourth-quarter fiscal 2023.
In the first six months of fiscal 2024, NDSN generated net cash of $295 million from operating activities, up 2.5% from the last fiscal year’s tally. Capital invested in purchasing property, plant and equipment totaled $21.9 million, up 42.7% from the year-ago fiscal period.
Dividends/Share Buyback
In the first six months of fiscal 2024, Nordson paid out dividends amounting to $77.8 million, up 4.5% from $74.5 million in the same period of the previous fiscal year.
Nordson’s treasury purchase shares amounted to $7.9 million in the first six months of fiscal 2024, which were down from $54.4 million in the last fiscal year.
Outlook
For the third quarter, NDSN expects sales in the range of $645-$670 million and adjusted earnings in the range of $2.25-$2.40 per share.
For fiscal 2024 (ending October 2024), Nordson anticipates adjusted earnings in the range of $9.35-$9.75 per share compared with $10.00-$10.50 per share predicted earlier. Sales are expected to increase in the range of 0-2% from the previous fiscal year’s reported number compared with an increase of 4-7% anticipated earlier.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -14.98% due to these changes.
VGM Scores
Currently, Nordson has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. 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. It's no surprise Nordson has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.