Nordson (NASDAQ:NDSN) Corporation NDSN yesterday announced that it has entered into a deal with Spectris plc for the acquisition of NDC Technologies. The value of the deal is $180 million.
Nordson's shares inched up 1% yesterday, eventually closing the trading session at $233.36.
Headquartered in Dayton, OH, NDC Technologies specializes in developing and producing several types of process measurement and control instrumentation for manufacturing industries. Solutions offered by the company — including in-line measurement sensors, on-line gauges and at-line analyzers as well as algorithms and software — are used for enhancing quality and reliability in customers’ manufacturing processes. As noted, the company generates annual revenues of $90 million and earnings before interest, taxes, depreciation and amortization of $15 million.
Acquisition Rationale
The addition of NDC Technologies’ expertise in precision measurement technology will expand Nordson's test and inspection platform. The acquisition will enable Nordson to strengthen its position in electronics end market and expand into new end markets, including film extrusion & converting, consumer non-durable as well as cable & tubing and energy storage.
Upon completion of the deal, NDC Technologies will be integrated into Nordson's Advanced Technology Solutions segment. The segment provides services for inspection, surface treatment and controlled dispensing of material. It contributed 49.3% to total sales in the second quarter of fiscal 2021 (ended Apr 30, 2021). Nordson expects to fund the transaction through cash. Exiting the fiscal second quarter, the company’s cash and cash equivalents were $133.3 million.
The company is set to release third-quarter fiscal 2021 (ended July 2021) results on Aug 31, after market close.
Other Inorganic Moves
The company intends to strengthen and expand its businesses through acquisitions. Acquisitions had a positive impact of 2.4% on sales of the Advanced Technology Solutions segment in the second quarter of fiscal 2021.
A notable buyout made by the company is vivaMOS Ltd. in September 2020. The acquisition has been strengthening its test and inspection capabilities. Also, the buyout of Fluortek, Inc., completed in June 2020, has been augmenting its medical product lines.
Zacks Rank, Price Performance and Estimate Trend
The company, with a $13.6-billion market capitalization, currently carries a Zacks Rank #3 (Hold). In the quarters ahead, the company is poised to benefit from strength in its test & inspection, consumer non-durable, and medical end markets. Also, the implementation of its growth-focused framework and Nordson Business System (“NBS Next”) might prove beneficial. However, rising costs and expenses pose a concern.
In the past three months, the company’s shares have gained 7.7% against the industry’s decline of 1.5%.
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In the past 30 days, the Zacks Consensus Estimate for the company’s earnings moved up 1.2% to $7.65 for fiscal 2021 (ending October 2021) on two upward estimate revisions against none downward. Over the same time frame, the consensus estimate for fiscal 2022 (ending October 2022) earnings inched up 1.5% to $8.55 on two upward estimate revisions against none downward.
Stocks to Consider
Some better-ranked stocks from the same space are Kadant (NYSE:KAI) Inc. KAI, Dover Corporation (NYSE:DOV) DOV and EnPro Industries, Inc. NPO. While Kadant sports a Zacks Rank #1 (Strong Buy), Dover and EnPro carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Kadant pulled off an earnings surprise of 22.26%, on average, in the trailing four quarters.
Dover pulled off an earnings surprise of 17.59%, on average, in the trailing four quarters.
EnPro pulled off an earnings surprise of 80.64%, on average, in the trailing four quarters.
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Dover Corporation (DOV): Free Stock Analysis Report
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