NDSN 237.15 (+0.8%)
US6556631025Industrial ProductsSpecialty Industrial Machinery

Last update on 2024-06-07

Nordson (NDSN) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Detailed Piotroski F-Score Analysis of Nordson (NDSN) for 2023 revealing profitability, liquidity, and efficiency scores. Final Score: 5/9.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 5

We're running Nordson (NDSN) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

We’ve examined Nordson (NDSN) using the Piotroski F-Score, which ranges from 0 to 9 and measures a company’s financial stability. Nordson has scored 5 on this scale, suggesting a mixed but moderately positive financial position. The analysis includes nine criteria focused on profitability, liquidity, and operating efficiency. For profitability, Nordson exhibits positive net income and strong operating cash flow, but a declining return on assets. Liquidity indicators are also mixed: while the current ratio has improved and shares have not been diluted, the leverage has increased. In terms of operating efficiency, the gross margin and asset turnover ratio have both declined. This indicates some areas where the company is underperforming despite showing strengths in others.

Insights for Value Investors Seeking Stable Income

Based on Nordson's Piotroski F-Score of 5, the company shows moderate financial health with both strengths and weaknesses. As an investor, it could be worth looking into Nordson further because it demonstrates substantial profitability and cash flow strengths. However, due to declining asset turnover and gross margin, it’s essential to investigate these concerns before making an investment decision. Evaluate industry trends and potential for operational improvements to ensure a well-rounded investment outlook.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Nordson (NDSN)

Company has a positive net income?

Net income determines the profitability of a company, indicating financial health and operational efficiency.

Historical Net Income of Nordson (NDSN)

Nordson (NDSN) posted a net income of $487,493,000 in 2023, which is indeed positive. Over the past 20 years, the company has reported mostly positive net incomes, except for 2009 when it faced a significant loss of $160,055,000. Additionally, the net income demonstrates a robust recovery from the minor dips in 2019 and 2020, showing a peak in 2022 at $513,103,000, albeit with a slight decrease in 2023. Given the positive net income in 2023, Nordson receives 1 point for this criterion.

Company has a positive cash flow?

Positive cash flow from operations indicates the company's ability to generate sufficient funds to maintain and grow its operations.

Historical Operating Cash Flow of Nordson (NDSN)

For Nordson (NDSN), the cash flow from operations in 2023 stands at $641,282,000, which is undeniably positive. This is a strong indicator that the company is generating enough internal cash flow to support its business activities. If we look at the historical data, there's a clear upward trajectory in Nordson's CFO over the past 20 years, from $87,547,000 in 2003 to the current $641,282,000. This significant growth trend is a positive sign for investors and stakeholders, underlining Nordson's operational efficiency and solid financial health.

Return on Assets (ROA) are growing?

Return on Assets (ROA) indicates how efficiently a company is using its assets to generate earnings. Comparing ROA across years showcases performance improvement or decline.

Historical change in Return on Assets (ROA) of Nordson (NDSN)

In 2023, Nordson's ROA was 0.1075, down from 0.1348 in 2022. This indicates inefficiency in asset utilization for generating earnings compared to the previous year. It is important to note that the long-term data shows a varying trend in ROA over the past 20 years, with the industry median hovering around 0.3182 to 0.3616. Nordson's ROA in both 2022 and 2023 falls significantly below the industry median. This declining ROA trend is concerning when viewed in the industry context, highlighting the need for Nordson to reassess operational efficiency.

Operating Cashflow are higher than Netincome?

This criterion compares if the operating cash flow is higher than net income. It is important to consider as a higher operating cash flow than net income indicates high earnings quality and good cash collection efficiency.

Historical accruals of Nordson (NDSN)

For the fiscal year 2023, Nordson's operating cash flow was $641,282,000, significantly higher than its net income of $487,493,000. This results in a point being added to Nordson's Piotroski F-Score, indicating strong earnings quality. Historical data further illustrates this trend consistently: in the past 20 years, operating cash flow has generally been robust, exceeding net income in most years. This suggests consistent operational strength and reliable cash flow generation. The trend is favorable, as robust cash flows underscore the company's efficiency in turning profits into actual cash, reducing the risk of future insolvency or liquidity issues.

Liquidity of Nordson (NDSN)

Leverage is declining?

Change in leverage measures the shift in a company's financial leverage, represented by the ratio of its debt to equity.

Historical leverage of Nordson (NDSN)

Nordson Corporation's (NDSN) leverage has increased from 0.1171 in 2022 to 0.3286 in 2023. This significant rise in leverage implies that the company has increased its use of debt financing relative to equity. An increase in leverage can suggest higher future risk, as more of the company's earnings will need to cover debt payments. Given this increase, Nordson does not earn a point for this Piotroski criterion, rendering this development unfavorable.

Current Ratio is growing?

The Current Ratio is a financial metric that measures a company's ability to pay short-term obligations with current assets. A higher ratio indicates better liquidity.

Historical Current Ratio of Nordson (NDSN)

In 2023, Nordson's Current Ratio was 2.1119, an increase from 1.3581 in 2022. This indicates improved liquidity and an enhanced ability to cover short-term liabilities, which is a positive trend. Over the last two decades, Nordson's Current Ratio has generally fluctuated but often remained above the industry median. In 2023, the industry's median current ratio was 1.7757, which means Nordson is outperforming its peers in this regard. Thus, this criterion adds 1 point to the Piotroski score.

Number of shares not diluted?

Outstanding shares reflect the number of shares that are currently owned by all shareholders. Fluctuations can impact important metrics like EPS and stock prices.

Historical outstanding shares of Nordson (NDSN)

In 2023, Nordson's outstanding shares decreased from 57,629,000 in 2022 to 57,090,000. Since outstanding shares decreased, this indicates a reduction in supply, potentially increasing shareholder value by improving metrics such as Earnings Per Share (EPS). Thus, this trend is positive for this criterion and adds 1 point. Historically, from 2003's 67,798,000 shares to the present, the numbers have fluctuated but show a general decrease over the years, reinforcing a potentially positive long-term trend for shareholders.

Operating of Nordson (NDSN)

Cross Margin is growing?

The criterion checks if the Gross Margin (GM) for the company has increased compared to the previous year, indicating higher profitability.

Historical gross margin of Nordson (NDSN)

Comparing the Gross Margin of Nordson (NDSN) in 2023, which is 0.5423, with 2022's 0.5507, we observe a decrease. A reduction from 0.5507 to 0.5423 indicates a slight decline in profitability from 2022 to 2023. This trend aligns with a negative outlook for Nordson's efficiency in leveraging its revenue to maintain higher profits. Historically, Nordson's gross margin has maintained a competitive edge over the industry median; for instance, in 2023, its GM stands at 0.5423, significantly higher than the industry median of 0.3492. Despite this competitive edge, the downward trend in recent years marks a point of concern, highlighting areas where the company might need to enhance operational efficiencies to revert back to higher margins. Hence, in Piotroski Analysis, this criterion would score 0 points for 2023.

Asset Turnover Ratio is growing?

Asset turnover ratio measures a company's efficiency in generating sales from its assets; a higher ratio indicates better performance.

Historical asset turnover ratio of Nordson (NDSN)

The asset turnover ratio of Nordson (NDSN) has decreased from 0.6806 in 2022 to 0.5795 in 2023. Comparing these two years, it is evident that Nordson has experienced a decline in efficiency in utilizing its assets to generate sales, resulting in a score of 0 points for this criterion. When we examine the data over the past 20 years, we observe significant fluctuations: the highest ratio recorded was 1.1098 in 2010. The decline to 0.5795 in 2023 signifies the lowest in the 20-year span. Nordson needs to focus on optimizing asset use to improve sales efficiency.


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