Nordson Corporation (NDSN), the manufacturer of dispensing equipment, is using cost cutting to ride out the global slowdown. It has surprised on estimates 3 out of the last 4 quarters. The company continues to pay a healthy dividend far above others in its industry.
Company Description
Nordson Corporation manufactures dispensing equipment that applies adhesives, sealants and coatings to industrial products during manufacturing operations. It also provides equipment used in the testing and inspection of electronic components as well as technology-based systems used for curing and surface treatment processes.
The company’s customers include manufacturers of appliances, automotive, construction, electronics, food and beverage, packaging and life sciences. It has sales support offices in 30 countries.
Nordson Surprised by 62.9% in the Fiscal Second Quarter
On May 21, Nordson reported fiscal second quarter 2009 results which easily surprised on analysts’ estimates by 17 cents. Adjusted earnings per share were 44 cents compared to analysts’ estimates of just 27 cents.
While this was well under the 97 cents in the year ago period, it better than the first quarter results of 39 cents.
The global recession continued to play havoc with the company’s revenue as it fell to $189 million from $294 million in 2008. Nordson has instituted cost cutting as a response to the difficult conditions. It expects to save $80 million in 2009 from those initiatives.
Backlog
The backlog at the end of the second quarter fell 29% to $80 million compared to $113 million at the end of second quarter 2008 due to the poor economic environment. However, the company saw a 4% increase in the backlog quarter over quarter.
Order rates, which have dropped year over year, also showed an increase in recent months, rising 9% in the last two and one-half months compared to the first two months of the calendar year.
Estimates Jumped
Covering analysts are bullish on the company, which has surprised on estimates 3 out of the last 4 quarters by an average of 26.78%.
Third quarter consensus estimates spiked 13 cents to 49 cents in the last 60 days.
Fiscal 2009 consensus estimates rose 26.3% to $1.92 from $1.52 also in the last 60 days.
Growth
Analysts still expect 5-year average earnings growth of 12.5% which is higher than the expected industry average of 11.10%.
Income
Nordson pays a dividend with a current yield of 1.90%. Its dividend payout is much higher than the industry average, which is zero.
Fundamentals
Nordson is a Zacks #1 Rank (strong buy) stock. It is trading with a forward P/E of 19.92. It has a solid 1-year return on equity (ROE) of 16.13%.
