Nordson (NDSN:NAS) Fundamental Valuation Report


Fundamental Valuation Report

Nordson(NDSN:NAS)

Industrials:Diversified Industrials

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$114.78 (USD) 17/12/2018

Weighted Valuation
$140.00 (USD)

Overall Rating
Undervalued by 22.0%

Valuation Models Analyst Consensus: $140.00 (USD)
(in order of importance)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (NDSN:NAS USD)

Price 114.78
Range 114.20 – 119.62
52 week 110.68 – 151.14
Open 118.49
Vol / Avg. 431056/361015
Mkt cap 6.65B
P/E 22.94
Div/yield 1.25/0.01
EPS 6.40
Shares 57.93M
Beta 1.34

Company Description

Nordson Corp manufactures and sells differentiated products used to dispense adhesives, coatings, sealants, fluids, and other materials. Its products help test and treat various surfaces and enhance product durability and appearance. Customers are primarily in consumer and technology end markets, including packaging, electronics, medical, energy, and transportation. The company has three operating segments: adhesive dispensing (roughly half of total sales), advanced technology, and industrial coating. Many components are made in standard modules that can be used in multiple products or in combination with other components for a variety of models. Approximately two thirds of total revenue is generated outside the United States.

Valuation Details

 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 $155.80 (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: $155.80 1% 5% 1% 5%
WACC (or Ke) 8.14 $198.24 $127.19
Terminal Growth Rate 3.00 $129.71 $194.48
Tax Rate 0.16 $166.91 $144.68
Cash Flow 774,773,937 $145.85 $165.74
Capital Expenditures -64,235,000 $155.04 $156.55
Long Term Debt 1,044,860,000 $156.70 $154.89

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

Comparables Model

Using similar companies and price based ratios we generated a valuation of $161.50 (USD) for NDSN:NAS. We also generated a valuation of $147.05 (USD) using other metrics and comparables.
The comparable companies were A.O. Smith (AOS:NYS), Barnes Group (B:NYS), Graco (GGG:NYS), Lennox International (LII:NYS) and Zebra Technologies (ZBRA:NAS).

Company NDSN:NAS End Date Value
Earnings/Share $6.40 (USD)
Book Value/Share $24.56 (USD)
Sales/Share $38.45 (USD)
Cash Flow/Share $8.01 (USD)
EBITDA/Share $10.29 (USD)
Price Based on Comps Adjustment Factor (%)
$198.05 (USD) -24.4
$149.33 (USD) 42.7
$109.71 (USD) 77.4
$124.44 (USD) 1.6
$149.98 (USD) -20.9
NDSN:NAS Ratios Used Average Values AOS:NYS B:NYS GGG:NYS LII:NYS ZBRA:NAS
19.11 PE Ratio 30.95 24.05 45.49 25.17 28.52 31.49
4.90 PB Ratio 6.08 4.59 2.55 9.20 0.00 7.98
3.13 PS Ratio 2.85 2.61 2.16 4.74 2.39 2.37
15.03 PCF Ratio 18.34 17.61 16.53 22.21 21.99 13.37
13.50 EV to EBITDA 14.57 12.21 11.25 16.35 18.12 14.93

Multiples

Using a multiples approach we generated a valuation of  $144.05 (USD) for NDSN:NAS

Company NDSN:NAS End Date Value
Earnings/Share $6.40 (USD)
Book Value/Share $24.56 (USD)
Sales/Share $38.45 (USD)
Cash Flow/Share $8.01 (USD)
EBITDA/Share $10.29 (USD)
Price Based on Comps Adjustment Factor
$139.96 (USD) 0
$152.62 (USD) 0
$123.76 (USD) 0
$151.20 (USD) 0
$152.69 (USD) 0
Ratios Ratio Average
PE Ratio 21.87
PB Ratio 6.21
PS Ratio 3.22
PCF Ratio 18.87
EV to EBITDA 14.84

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  NDSN:NAS for the last 10 years was  6.11

We ran the Adjusted Book Value for  NDSN:NAS and generated a book value of  $25.00 (USD)
By multiplying these we get an adjusted valuation of  $152.73 (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 2019 of $140.00 (USD).

NDSN:NAS Nordson

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 5 0 3.3333 Hold 2018-12-14

Current Price: 114.78 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 6.56 7.16 8.40
# EPS Analysts 5 4 1
Mean Revenue 2,313.50 2,418.80 2,660.00
# Revenue Analysts 5 4 1
Mean Target Price 140.00
Mean Cash Flow 8.47 8.75
Mean EBITDA 650.00 684.00
Mean Net Income 382.90 413.10
Mean Debt Outstanding 824.30 460.70 430.00
Mean Tax Rate 22.75 23.00
Mean Growth Rate 11.85
Mean Capital Expenditure 57.00 62.00 72.00

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.

Notice to User


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