Nordson (NDSN), a prominent manufacturer of adhesives and industrial coatings, delivered strong quarterly results, exceeding both earnings and revenue expectations for the period ending July 2024. The company reported earnings per share of $2.41, surpassing the Zacks Consensus Estimate of $2.33. This represents a 3.43% earnings surprise, marking the fourth consecutive quarter where Nordson has outperformed consensus EPS estimates. Revenue for the quarter reached $661.6 million, exceeding the Zacks Consensus Estimate by 0.97% and surpassing the $648.68 million recorded in the same period last year. This marks the third time in the past four quarters that Nordson has surpassed revenue expectations.
However, despite the positive performance, the future outlook for Nordson remains uncertain. While the company’s recent earnings beat might suggest optimism, the broader industry outlook and mixed earnings estimate revisions present a more nuanced picture.
The stock has underperformed the market so far this year, losing approximately 9.4% compared to the S&P 500’s gain of 17.3%. Investors are naturally curious about the stock’s future trajectory, and while there are no easy answers, the company’s earnings outlook can provide valuable insights.
Ahead of the earnings release, the estimate revisions trend for Nordson was mixed. While the magnitude and direction of estimate revisions could change following the recent earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. This suggests that the shares are expected to perform in line with the market in the near future. Investors will be closely watching how estimates for upcoming quarters and the current fiscal year evolve in the days ahead.
The current consensus EPS estimate stands at $2.63 on $712.27 million in revenues for the coming quarter and $9.52 on $2.65 billion in revenues for the current fiscal year. However, investors should also consider the broader industry outlook, as it can significantly impact the stock’s performance. The Manufacturing – General Industrial industry, where Nordson belongs, is currently ranked in the bottom 23% of the 250 plus Zacks industries.
Research suggests that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. This highlights the importance of considering the industry environment when evaluating a stock’s potential.
Another company in the broader Zacks Industrial Products sector, ScanSource (SCSC), is expected to report its results for the quarter ended June 2024 on August 27. This technology products distributor is projected to post quarterly earnings of $0.95 per share, representing a year-over-year change of +25%. The consensus EPS estimate for the quarter has remained unchanged over the past 30 days. ScanSource’s revenues are expected to be $840.7 million, down 11.3% from the year-ago quarter.
