By Rob Otman
Nordson (Nasdaq: NDSN) is a mid cap company that operates within the machinery industry. Its market cap is $8 billion today, and the total one-year return is 18.59% for shareholders.
Nordson stock is underperforming the market. It’s beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
✗ Earnings-per-Share (EPS) Growth: Nordson reported a recent EPS growth rate of 18.92%. That’s below the machinery industry average of 301.94%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the machinery industry is 26.17. And Nordson’s ratio comes in at 23.55. It’s trading at a better value than many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for Nordson stock is 156.94%. That’s above the machinery industry average of 69.08%. That’s not a good sign. Nordson’s debt levels should be lower.
✓ Free Cash Flow per Share Growth: Nordson’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Nordson comes in at 17.21% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Nordson’s profit margin is above the machinery average of 8.94%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Nordson is 30.78%, and that’s above its industry average ROE of 18.45%.
Nordson stock passes four of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Buy With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You