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Nordson (NDSN) Rewards Shareholders with 11% Dividend Hike

Precision dispensing equipment manufacturer Nordson Corporation NDSN recently announced 11% increase in its quarterly dividend rate. We believe that such disbursements reflect the company’s strong cash position and its commitment toward rewarding its shareholders handsomely.
As revealed, the dividend hike from 27 cents to 30 cents per share, was approved by the company’s board of directors. On an annualized basis, the dividend increased to $1.20 from $1.08 per share. This move marks the company’s consecutive 54 annual dividend increases.  

Nordson will pay the revised dividend (amounting to $17.3 million) on Sep 5, 2017 to shareholders on record as of Aug 22.

Notably, the company paid dividends of approximately $15.5 million to its shareholders in second-quarter fiscal 2017 (ended Apr 30, 2017). Exiting the quarter, the company had cash and marketable securities of $88.4 million while its net cash generated from operating activities totaled $61.4 million. We believe that impressive financial performance in the quarters ahead will enable the company to continue rewarding its shareholders handsomely through dividend increments.

Nordson is slated to release its third-quarter fiscal 2017 (ended Jul 31, 2017) results on Aug 21, after the market closes. The company anticipates sales to increase in the range of 15−19% in the quarter and predicts organic growth to be 6−10%. Acquisition gains will likely lead to 10% sales growth, offset by 1% negative impact from adverse foreign currency movements. Operating margin will likely be 24%. GAAP earnings are expected in the range of $1.51−$1.65 per share.

Key Picks

Nordson has approximately $7 billion market capitalization. We believe that the company is poised to benefit from its solid product portfolio and inorganic growth initiatives. However, stiff competition from other major players in the industry can restrict its growth momentum in the quarters ahead. Prime competitors include Altra Industrial Motion Corporation AIMC, Kadant Inc. KAI and Sun Hydraulics Corporation SNHY.

Altra Industrial Motion delivered an earnings beat of 11.76% in second-quarter 2017. For 2017, the company anticipates earnings to be $1.95–$2.05 per share.

Kadant’s second-quarter 2017 financial performance were impressive, with a positive earnings surprise of 14.29%. It anticipates 2017 earnings to be $3.99−$4.07.

Sun Hydraulics pulled off a positive earnings surprise of 33.33% in second-quarter 2017.
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Nordson Corporation (NDSN): Free Stock Analysis Report
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