Nordson Stock Exhibits Strong Prospects Despite Persisting Headwinds

Nordson Corporation NDSN is benefiting from strong momentum in the Advanced Technology Solutions segment. Sales from this segment increased 18% year over year in the second quarter of fiscal 2025 (ended April 2025), driven by growing demand for electronics dispense, optical and x-ray inspection systems product lines within the semi-conductor and electronics end markets. Increase in demand for the nonwovens, packaging and consumer non-durable product lines is also aiding Nordson.

Driven by strength across its businesses, the company expects sales to be in the range of $710-$750 million in the third quarter of fiscal 2025 (ending July 2025), implying an increase of 10.3% at the midpoint on a year-over-year basis.

NDSN solidified its product portfolio and leveraged business opportunities through asset additions. In August 2024, Nordson completed the acquisition of Atrion Corporation, which enabled it to expand its medical offerings in the infusion and cardiovascular therapies market. The buyout was combined with its medical business. Also, in August 2023, the company acquired ARAG Group and its subsidiaries. The acquisition expanded Nordson’s core capabilities in precision dispensing technology, helping it foray into the rapidly growing precision agriculture end market. ARAG is part of its Industrial Precision Solutions segment. In the second quarter of fiscal 2025, acquired assets boosted the company’s total revenues by 7.8%.

Nordson’s commitment to rewarding shareholders through dividends and share buybacks is encouraging. The company paid out dividends of $88.9 million in the first six months of fiscal 2025, up 14.3% year over year. In the same period, it bought back treasury shares worth $146.3 million compared with $7.9 million in the year-ago period. In August 2024, NDSN hiked its dividend by 15% to 78 cents per share. This marks its 61st consecutive year of dividend increase.

NDSN’s Price Performance

In the year-to-date period, this Zacks Rank #3 (Hold) company’s shares have gained 2.9% compared with the industry’s 3.5% growth.

Downsides of NDSN

Nordson is experiencing weakness across the Industrial Precision Solutions and Medical and Fluid Solutions segments. Lower demand for polymer processing and industrial coatings product lines is ailing the Industrial Precision Solutions segment. The segment’s organic sales declined 6.9% year over year in the second quarter of fiscal 2025. Also, decreased demand for medical interventional product lines, owing to continued destocking, is affecting the Medical and Fluid Solutions segment’s performance. The segment’s organic revenues declined 10% in the fiscal second quarter.

Given the company’s substantial international operations, foreign-currency woes are also likely to hurt its top line in the quarters ahead. The foreign currency headwinds had an adverse impact of 0.4% on sales in the fiscal second quarter.

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This article originally published on Zacks Investment Research (zacks.com).

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