Last week, you might have seen that Nordson Corporation (NASDAQ:NDSN) released its first-quarter result to the market. The early response was not positive, with shares down 3.0% to US$172 in the past week. It was not a great result overall. While revenues of US$495m were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 14% to hit US$0.89 per share. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we’ve aggregated the latest statutory forecasts to see whether analysts have changed their mind on Nordson after the latest results.
Following the latest results, Nordson’s six analysts are now forecasting revenues of US$2.24b in 2020. This would be a credible 2.2% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to accumulate 4.0% to US$6.16. Yet prior to the latest earnings, analysts had been forecasting revenues of US$2.25b and earnings per share (EPS) of US$6.23 in 2020. The consensus analysts don’t seem to have seen anything in these results that would have changed their view on the business, given there’s been no major change to their estimates.
Analysts reconfirmed their price target of US$178, showing that the business is executing well and in line with expectations. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Nordson analyst has a price target of US$200 per share, while the most pessimistic values it at US$140. As you can see, analysts are not all in agreement on the stock’s future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It’s pretty clear that analysts expect Nordson’s revenue growth will slow down substantially, with revenues next year expected to grow 2.2%, compared to a historical growth rate of 7.0% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 1.5% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkNordson will grow faster than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there’s been no major change in the business’ prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations – and our data does suggest that Nordson’s revenues are expected to grow faster than the wider market. The consensus price target held steady at US$178, with the latest estimates not enough to have an impact on analysts’ estimated valuations.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have forecasts for Nordson going out to 2021, and you can see them free on our platform here.
You can also view our analysis of Nordson’s balance sheet, and whether we think Nordson is carrying too much debt, for free on our platform here.
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