Nordson Corporation (NDSN): A Bull Case Theory

We came across a bullish thesis on Nordson Corporation on Value investing subreddit by SniperPearl. In this article, we will summarize the bulls’ thesis on NDSN. Nordson Corporation's share was trading at $226.95 as of September 30th. NDSN’s trailing and forward P/E were 28.55 and 20.53 respectively according to Yahoo Finance.

Nordson Corporation, a 70-year-old industrial stalwart, has quietly built a reputation as a consistent cash generator, increasing its dividend for 61 consecutive years. The company’s moat lies in its focus on niche industrial solutions, high-margin consumables, and disciplined capital allocation, generating an average EBITDA of ~30% and ROIC above 12%. Over the past 15 years, Nordson has diversified away from cyclical industries through strategic acquisitions, steadily expanding into medical and fluid solutions as well as advanced technology solutions for electronics and semiconductors. Under CEO Sundaram Nagarajan, who assumed leadership in 2019, Nordson introduced the Ascend strategy targeting 6-8% growth and 10-12% EPS expansion, signaling a shift from a defensive compounder to a deliberate growth-oriented industrial aristocrat.

Nagarajan’s tenure has been marked by bold moves, including the 2022 acquisition of CyberOptics for semiconductor inspection, positioning Nordson in high-growth markets tied to AI, EV batteries, and chiplets, and the 2024 purchase of Atrion, a medical valves and fluid components business, providing stable, high-margin cash flow. These complementary bets balance secular growth and defensive ballast, redefining Nordson’s portfolio while increasing goodwill from $1.8 billion to $2.8 billion. Today, the company trades at ~17-18x EV/EBITDA, below peer Graco (~20x), leaving potential upside if CyberOptics sustains growth and Atrion delivers consistent results.

Nordson’s strong balance sheet, consumables-driven revenue, and global diversification mitigate risks from cyclical semiconductors, FX exposure, and goodwill pressures. Even in a conservative scenario, the company offers a low-beta, reliable cash-flow story. If its growth initiatives succeed, Nordson could be rerated to peer multiples, delivering 15-25% upside, combining the stability of a long-standing industrial compounder with the optionality of a company deliberately pursuing transformative growth.

Previously we covered a bullish thesis on Graco Inc. (GGG) by Stock Analysis Compilation in December 2024, which highlighted the company’s leadership in fluid handling equipment, strong margins, and stable demand from parts and accessories. The company's stock price has been flat since our coverage. The thesis still stands as Graco’s durable niche position remains compelling. SniperPearl shares a similar perspective but emphasizes Nordson’s deliberate transformation into a growth-oriented industrial aristocrat.

Nordson Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held NDSN at the end of the second quarter which was 23 in the previous quarter. While we acknowledge the potential of NDSN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.