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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of adhesives and coatings maker Nordson (Nasdaq: NDSN ) roared as much as 11% higher after the company reported second-quarter earnings results.
So what: We got a first-hand look today at precisely why the stock market and investors are forward-looking. For the second quarter, Nordson's revenue actually fell 1% to $315.2 million while its adjusted profit dipped to $0.84 from $0.95 in the year-ago period. Wall Street had been expecting a profit of $0.87 on sales of $321.2 million, so it's a miss on both accounts. However -- and it's a big however -- the company guided its fiscal-third-quarter EPS to a range of $0.96-$1.04 with revenue of $337 million to $349 million on strength it's seeing in new orders. That's well ahead of the $0.86 and $326 million the Street had expected.
Now what: An earnings miss now versus an earnings beat to come makes for some very confused investors. Overall, the two quarters balance each other out and make Nordson the perfect stock to watch from the sidelines. At 15 times forward earnings and with a 1% dividend yield, it's not a compelling buy, but also not overvalued. I'd keep an eye on the stock to see if it makes a large move in either direction and then look to re-examine it.
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