Why Nordson Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of specialty supplier Nordson (NAS: NDSN) rose as much as 14% after the company posted better-than-expected quarterly results.

So what: Profits increased 18% for the adhesive maker as sales rose 22% with strong gains across all three business segments. Adjusted earnings per share of $1.06 beat analyst estimates by $0.07 while its $380 million in revenue came in well ahead of the $358 million the Street was looking for. The company also provided improved guidance of $0.98-$1.06 and better-than-expected sales for the next quarter. The brighter outlook was based in part on order rates increasing 15% over last year, and the company's backlog growing by a whopping 49%.

Now what: It's no surprise to see shares shoot through the roof after a quarter like that. Nordson appears to be firing on all cylinders, and as a cyclical business, that could be a good, albeit small, sign for the economy as a whole. The company's share price has now risen 60% in the last year, and shows little sign of fading with such growth in its backlog, and its high operating margins are a sign of a competitive advantage. In the near future, investors will want to pay special attention to its advanced technology systems segment, whose top line increased 33% organically in the last quarter. If the company can maintain a pace like that, this should continue to be a solid investment.

Want to stay connected to Nordson? Just add Nordson to your Watchlist.

The article Why Nordson Shares Jumped originally appeared on Fool.com.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.