Dispensing equipment manufacturer Nordson Corporation (Nasdaq: NDSN) reported fiscal 2016 third-quarter results that blew away analysts’ estimates. Considering the strong fourth-quarter earnings guidance, impressive operating margin, and increase in the order backlog, we believe that the share price of Nordson is poised for further rise. Nordson, which has operations in 30 countries closed the prior trading session at $99.96.
The Westlake, Ohio-based manufacturer of hot melt extruders, reported Q3 2016 revenue of $489.90 million, up from $462.73 million in Q3 2015. A survey among analysts, conducted by Thomson Reuters, estimated the revenue to be $479.8 million.
During the fourth quarter, the Adhesive dispensing systems revenue increased to $220.80 million, from $211.65 million in the similar quarter last year. The Advanced technology systems revenue grew 11.4% y-o-y to $205.37 million. However, the Industrial coating systems revenue was $63.73 million, down 2.6% from $66.19 million in the third quarter last year.
During the third quarter, the company posted a net income of $84.21 million or $1.46 per share, compared to $69.39 million or $1.14 per share in the similar period last year.
Excluding restructuring charges, among others, the third-quarter non-GAAP earnings of $1.47 per share were higher than the Wall Street earnings estimates of $1.43 per share. In the third quarter of the previous fiscal year, Nordson, the manufacturer of adhesives and sealants dispensing systems, reported non-GAAP earnings of $1.16 per share.
The company anticipates fourth-quarter revenue to increase between 6% and 10%, from the prior year’s similar quarter. The outlook is based on the assumption of 5% to 9% organic growth and 1% based on last year’s acquisitions. Nordson also expects a fourth-quarter operating margin of about 22% and earnings per share in the range of $1.15 to $1.27. Thus, considering the strong revenue and earnings growth, optimistic fourth-quarter earnings outlook, and increase in cash and cash equivalents, we forecast the share price to remain upbeat in the current quarter.
In anticipation of good results, the stock broke above 87 in the second week of August. The mainline of the MACD indicator is rising and continues to move above the signal line. Thus, we can expect the uptrend to continue. However, there exists a technical gap between 92 and 97.
Thus, it is better to wait for the price to undergo a technical correction before purchasing a one-touch call option contract (enter when the price is near $95) from a suitable binary broker. The strike price for the call option should be preferably around $103. Finally, we believe that a four-week time span would more than suffice for the contract to hit the desired price.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
