Zacks Investment Research downgraded Nordson Corporation (NDSN) to a Zacks Rank #5 (Strong Sell) on Jan 3, 2015. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market.
Why the Downgrade?
Despite posting better-than-expected results for fourth-quarter fiscal 2014 (ended Oct 31, 2014), earnings estimates for the company have been lowered, reflecting a weak outlook for first-quarter fiscal 2015 (ending Jan 31, 2015).
Adverse currency translation movements had suppressed Nordson’s top-line growth by 2%. Regarding the segments, Adhesive dispensing systems suffered a 2.7% negative impact from currency translation, while Advanced technology systems and Industrial coating systems faced adverse effects of 0.4% and 1.6%, respectively.
Nordson Corporation anticipates the negative currency translation impact to worsen in first-quarter fiscal 2015, impacting revenues by 4%. Also, the organic growth assumption of 6−10% is below 13% achieved in fourth-quarter fiscal 2014. Generally Accepted Accounting Principles (“GAAP”) earnings are expected to come in a range of 60−70 cents per share, lower than $1.13 recorded in the fourth quarter.
Over the last 30 days, the Zacks Consensus Estimate for Nordson Corporation decreased by 3.4% to $4.21 for fiscal 2015 and by 3.1% to $4.66 for fiscal 2016. Also, the earnings estimates for first-quarter fiscal 2015 fell 9.5% to 6 cents per share.
Other Stocks to Consider
Nordson Corporation currently has a $4.9 billion market capitalization. Some better-ranked stocks in the chemical industry include Blount International Inc. (BLT), The Middleby Corporation (MIDD) and Sun Hydraulics Corporation (SNHY). All these stocks sport a Zacks Rank #1 (Strong Buy).
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