What happened
Shares of manufacturing company Nordson Corporation (NDSN 0.18%) fell as much as 12.8% in trading on Tuesday after reporting first-quarter fiscal 2023 financial results and guidance. At 12:30 p.m. ET, shares are hitting their lows for the day.
So what
First-quarter sales were $610 million, up 1% on an organic basis from a year ago, and net income was down 13.4% to $104.3 million, or $1.81 per share. On an adjusted basis, which pulls out one-time items, earnings were $1.95 per share, two cents below estimates.
What was concerning for investors is that management said in the earnings release that "order entry in recent weeks has decreased" and that some customers are pushing out delivery dates into the second half of the year. As a result, full-year revenue growth is expected to be 0% to 3%, and adjusted earnings guidance is $8.75 to $9.50 per share. The previous guidance was for 1% to 7% revenue growth and earnings of $8.75 to $10.10 per share.
Now what
The market is clearly reacting to management reducing guidance and saying that orders are slowing. This could be part of the economic slowdown fear that has been looming over the market for months.
Given slow growth, I don't see the company's price-to-earnings multiple of 24 times the midpoint of fiscal 2023 guidance as attractive. So I'm not buying the dip today, and investors may want to wait to see whether growth picks up in the second half of the year.
