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Nordson’s Sonoscan Buyout to Spur Test & Inspection Business

Zacks

Precision dispensing equipment manufacturer, Nordson Corporation NDSN yesterday announced that it has acquired Sonoscan, Inc. Financial consideration of the buyout was not disclosed.

Sonoscan is primarily engaged in designing and manufacturing acoustic-microscopes and micro imaging systems. Its products are mainly used by customers in the automotive, microelectronic, industrial electronics assembly and aerospace end markets. This Elk Grove Village, IL-based company was founded in 1974.

Market sentiments have been positive of Nordson in the last three months. The company’s shares have yielded 23.2% return, outperforming 7.5% gain of the industry it belongs to.



Benefits From the Buyout

Nordson will integrate the acquired assets with its Advanced Technology Systems segment. The company anticipates that addition of this asset will strengthen its test and inspection business, particularly the existing X-ray, bond testing and optical inspection solutions. Also, the addition of 85 skilled employees of Sonoscan will be an added benefit.

The acquisition is consistent with Nordson’s intention of expanding its electronics systems business in automotive electronics and semi-conductor packaging markets. Over time, the company has been capitalizing on its acquired assets by penetrating into unexplored markets and expanding its product lines. In this regard, buyouts of ACE Production Technologies, Inc. in January 2017, Plas-Pak Industries, Inc. and InterSelect GmbH in February and Advanced Technologies business of Vention Medical in March are worth mentioning. All these assets have strengthened the company’s businesses under Advanced Technology Systems segment. ACE Production Technologies and InterSelect are projected to deliver mid to high single digit growth over the next several years.

Notably, benefits from the acquired assets added 10% and 7% to Nordson’s revenue growth in fiscal fourth quarter and fiscal 2017, respectively. It anticipates acquired assets to contribute approximately 11% to sales growth in the first quarter of 2018. In addition, organic volume increase will strengthen sales by 15-19% while foreign currency movements will add 4%, bringing total revenue growth in the range of 30-34%.

Over the last 60 days, the Zacks Consensus Estimate for the stock increased 7.2% to $6.24 for fiscal 2018 (ending October 2018) and 6.6% to $6.82 for fiscal 2019.

Nordson Corporation Price and Consensus

Nordson Corporation Price and Consensus | Nordson Corporation Quote

Zacks Rank & Stocks to Consider

With a market capitalization of nearly $8.7 billion, Nordson currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the machinery industry are Sun Hydraulics Corporation SNHY, Atlas Copco AB ATLKY and EnPro Industries, Inc. NPO. While Sun Hydraulics sports a Zacks Rank #1 (Strong Buy), both Atlas Copco and EnPro Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sun Hydraulics’ earnings estimates for 2018 were revised upward in the last 60 days. Also, the company pulled off an average positive earnings surprise of 9.58% in the last four quarters.

Atlas Copco performed well in the last quarter, with a positive earnings surprise of 4.65%. Also, earnings expectations for 2018 improved over the past 60 days.

EnPro Industries’ earnings estimates for 2018 were revised upward in the last 60 days.

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