Recent fluctuations in the stock market have seen Nordson Corp (NDSN, Financial) experiencing a notable daily loss of 8.36%, contributing to a three-month decline of 6.01%. Despite these movements, the company's Earnings Per Share (EPS) stands strong at 8.55. This analysis seeks to determine whether Nordson's current market price aligns with its intrinsic value, as calculated by the GF Value.
Company Overview
Nordson Corp (NDSN, Financial) is a pivotal player in the manufacturing sector, specializing in equipment such as pumps, valves, dispensers, and applicators, which are crucial for dispensing adhesives, coatings, and sealants across various industries like packaging and electronics. With a market cap of $14.10 billion and annual sales reaching $2.70 billion, Nordson operates through three main segments: industrial precision solutions, medical and fluid solutions, and advanced technology solutions. The company's commitment to innovation and quality has positioned it as a leader in its field, reflected in a robust operating margin of 25.99% and a Return on Invested Capital (ROIC) of 13.01%.
Understanding the GF Value
The GF Value is a proprietary measure used to estimate the fair value of a stock. It incorporates historical trading multiples, an adjustment factor based on past performance and growth, and projected future business performance. For Nordson, the GF Value is set at $256.2, suggesting that at a current price of $245.98, the stock is fairly valued. This valuation implies that the long-term return on Nordson's stock should closely mirror the company's business growth rate, barring significant market volatility or changes in the business fundamentals.
Financial Strength and Stability
Investing in companies with robust financial health is crucial to minimizing the risk of capital loss. Nordson's financial strength is fair, with a cash-to-debt ratio of 0.08, which is lower than 93.21% of its peers in the Industrial Products industry. This metric, along with an interest coverage ratio, provides insight into the company's ability to manage and service its debt.
Profitability and Growth Prospects
Nordson has demonstrated strong profitability, with a consistent track record over the past decade. The company's operating margin outperforms 96.57% of its industry counterparts. Moreover, Nordson's growth metrics are equally impressive, with a 3-year average EBITDA growth rate of 21.3%, ranking better than 69.01% of companies in the Industrial Products sector. These figures highlight Nordson's efficient operations and potential for sustained growth.
Comparing Nordson's Return on Invested Capital (ROIC) of 13.01% against its Weighted Average Cost of Capital (WACC) of 9.76% further underscores its profitability. This comparison indicates that Nordson is generating a higher return on investments than the cost of its capital, which is a strong indicator of financial health and operational efficiency.
Conclusion
Based on the comprehensive analysis of Nordson's financial data and GF Value, it appears that Nordson (NDSN, Financial) is fairly valued at its current market price. The company's solid financial foundation and strong profitability metrics suggest a stable investment. For those interested in deeper insights or alternative investment opportunities, consider exploring the 30-Year Financials of Nordson or the GuruFocus High Quality Low Capex Screener for high-quality companies that may deliver above-average returns.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
