Please ensure Javascript is enabled for purposes of website accessibility

Why Nordson Corporation Stock Popped 18% Today

By Rich Smith - Dec 14, 2017 at 12:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sales show surprising strength -- and the growth isn't slowing down a bit.

What happened

Shares of adhesives- and coatings-dispensing equipment maker Nordson Corporation (NDSN 0.23%) stock jumped nearly 18% Thursday, and they're still up close to their highs of the day (up 17.9%) as of 11:15 a.m. EST. The reason, as you might suspect, is earnings.

Last night, Nordson beat analyst expectations with a report of $573.9 million in fiscal fourth-quarter 2017 sales and profits of $1.37 per share.

Glue dispensing machine

Image source: Getty Images.

So what

Sales were up 12.7% year over year, while profits increased only 4.6%. If that profit growth sounds a little underwhelming relative to the growth in sales, well, at least it was better than analysts had expected. According to Yahoo! Finance data, Wall Street's prediction for Q4 earnings was only $1.33 per share, which Nordson bested by four cents.

Nor were Wall Street analysts the only ones surprised by these results. As recently as three months ago, Nordson itself had predicted that profits could come in as low as $1.18 per share in Q4 -- and no higher than $1.32. What changed between then and now? Turns out, management's prediction of a decline in organic sales growth did not come to pass. Instead, sales exclusive of acquisitions grew a modest 2%.

Now what

Nordson now predicts that fiscal first-quarter 2018 sales will grow 30% to 34% year over year, driven in large part by even greater strength in organic sales growth. Operating margins should be in the neighborhood of 22%, resulting in profits per diluted share of between $1.29 and $1.39. That's $1.34 at the midpoint, and well ahead of Wall Street's expected $0.95 in profits for the quarter.

No wonder investors are cheering Nordson stock today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of Nordson. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nordson Corporation Stock Quote
Nordson Corporation
NDSN
$238.42 (0.23%) $0.55

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
390%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.