Last October, Barron’s was plugging Nordson (NDSN), the maker of precision dispensing systems for automotive coatings and sealants. That’s because then Nordson’s enterprise value was at a historical low; sales were growing by double digits and earnings growth was helped by foreign market exposure and a weak dollar.
Now Nordson faces a fallout from Friday’s FQ3 earnings miss announcement. The company blamed a weak
Since Barron’s October endorsement, Nordson rose 41% to $71.77 recently, trading at multiples of 20 times 2008 earnings. But shocked investors just weren’t prepared for an earnings disappointment. Shares fell 24% to $55 on Friday.
Management has promised to improve operating performance and margins, while they forecast recovery in 2009. But that’s still a ways off, and the company has reduced FQ4's $1.01 EPS forecast by 10%-20% . At least for now, Barron’s has pulled its plug.
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Zacks.com wrote just over a month ago that the company projected sales growth between 13%-17%, and had raised its Q3 guidance, in late July, to $0.91-$1.01. Nordson's CEO said then that "Nordson is well on its way towards another year of all-time highs in sales and earnings." Pretty dramatic turnaround in such a short time.
Chairman, President and CEO Ed Campbell said on Nordson's FQ3'08 conference call Friday (see full transcript here) that:
"Within the Industrial Coating and Automotive segment, the 18% decline in revenue is primarily centered in the US and the Americas. I will remind you that a large component of this segment is large, dollar engineered systems and this a Nordson segment most sensitive to general economic softness and any associated pause in capital spending."
With a shrinking overseas revenue cushion, Campbell warns that recession-reduced capital spending will continue to hurt the company.
