Nordson (NDSN:NAS) Fundamental Valuation Report


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Nordson $143.10 (USD) Close Price as of 20/12/2017

Based on the analysis conducted in this report, Nordson, (NDSN:NAS) is found to be  Fairly valued to slightly Undervalued.

Company Nordson
Symbol:Exchange NDSN:NAS
Industry Industrials:Diversified Industrials
Close Price/Date $143.10 (USD) 20/12/2017
Weighted Average Valuation $147.89 (USD)
Summary NDSN:NAS is found to be  Fairly valued to slightly Undervalued by 3.3% using the 3 valuation models shown below.
Valuation Models Used Analyst Consensus: $161.33 (USD)
(in order of importance) Discounted Cash Flow: $118.42 (USD)
Comparables: $166.52 (USD)
Valuation Methods Analysis This company is:
Cash Flow Basis: Overvalued on a Cash Flow Valuation basis
Comparable Company Basis: Undervalued on a Comparable Valuation basis
Asset Basis: Overvalued on an Asset Valuation basis

Valuation Details

Nordson Valuations

Summary chart

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for NDSN:NAS

Using a discounted cash flow model we generated an intrinsic value of $118.42 (USD) for NDSN:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

NDSN:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $118.42 1% 5% 1% 5%
WACC (or Ke) 8.40 $149.90 $96.78
Terminal Growth Rate 3.00 $98.80 $146.95
Tax Rate 0.30 $129.16 $107.68
Cash Flow 777,650,000 $110.45 $126.39
Capital Expenditures -55,043,000 $117.87 $118.97
Long Term Debt 1,044,860,000 $119.32 $117.51

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $166.52 (USD) for NDSN:NAS. We also generated a valuation of $147.75 (USD) using other metrics and comparables.
The comparable companies were A.O. Smith (AOS:NYS), Barnes Group (B:NYS), Graco (GGG:NYS), John Bean Technologies (JBT:NYS) and Lennox International (LII:NYS)

Company NDSN:NAS End Date Value
Earnings/Share $5.08 (USD)
Book Value/Share $20.01 (USD)
Sales/Share $35.51 (USD)
Cash Flow/Share $6.01 (USD)
EBITDA/Share $9.41 (USD)
Price Based on Comps Adjustment Factor (%)
$195.48 (USD) -24.4
$137.06 (USD) 54.4
$113.84 (USD) 72.9
$155.61 (USD) -6.4
$169.83 (USD) -23.1
NDSN:NAS Ratios Used Average Values AOS:NYS B:NYS GGG:NYS JBT:NYS LII:NYS
28.17 PE Ratio 38.48 30.14 22.33 70.57 40.15 29.22
7.15 PB Ratio 59.48 6.35 2.56 10.40 8.10 269.99
4.03 PS Ratio 3.21 3.68 2.50 5.31 2.21 2.32
23.82 PCF Ratio 25.90 32.32 15.38 25.04 31.74 25.03
17.84 EV to EBITDA 20.96 17.88 12.46 34.18 21.69 18.60

Multiples

Using a multiples approach we generated a valuation of  $118.54 (USD) for NDSN:NAS

Company NDSN:NAS End Date Value
Earnings/Share $5.08 (USD)
Book Value/Share $20.01 (USD)
Sales/Share $35.51 (USD)
Cash Flow/Share $6.01 (USD)
EBITDA/Share $9.41 (USD)
Price Based on Comps Adjustment Factor
$110.39 (USD) 0
$126.89 (USD) 0
$107.41 (USD) 0
$111.45 (USD) 0
$136.57 (USD) 0
Ratios Ratio Average
PE Ratio 21.73
PB Ratio 6.34
PS Ratio 3.02
PCF Ratio 18.55
EV to EBITDA 14.51

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  NDSN:NAS for the last 10 years was  6.14

We ran the Adjusted Book Value for  NDSN:NAS and generated a book value of  $20.02 (USD)
By multiplying these we get an adjusted valuation of  $122.94 (USD)

Analyst Data

In the Stockcalc database there are 3 analysts that provide a valuation for NDSN:NAS. The 3 analysts have a concensus valuation for NDSN:NAS for 2018 of $161.33 (USD).

NDSN:NAS Nordson

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 2 0 4.0000 Outperform 2017-12-19

Current Price: not available

Analyst Consensus
USD Millions 2018 2019 2020
Mean EPS 6.24 6.86 7.35
# EPS Analysts 4 3 1
Mean Revenue 2,311.40 2,451.80 2,579.00
# Revenue Analysts 4 3 1
Mean Target Price 161.33
Mean Cash Flow 7.56 8.19
Mean EBITDA 625.50 704.00 755.00
Mean Net Income 366.10 406.80
Mean Debt Outstanding 1,208.00 1,067.50 850.00
Mean Tax Rate 29.00 29.00
Mean Growth Rate 13.43
Mean Capital Expenditure 56.00 60.00 65.00

Company Overview (NDSN:NAS USD)

Price 144.69
Range 142.39 – 145.64
52 week 107.16 – 150.48
Open 142.56
Vol / Avg. 0.00/265,860.00
Mkt cap 8.35B
P/E 28.74
Div/yield 0.30/0.83
EPS 5.03
Shares 57.75M
Beta 1.39
Inst. own 70%
Summary chart

Detailed Company Description

Nordson Corp engineers, manufactures and markets differentiated products and systems used for adhesive, coating, sealant and biomaterial dispensing, fluid management, testing and inspection, curing, and surface treatment.

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.
The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).
The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.
With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.
If we have Analyst coverage for the company we use the consensus target price here.

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