Nordson Corporation (NDSN)

Conclusion

Nordson Corporation designs and sells dispensing, coating and fluid-control systems for adhesives, polymers and medical devices, organised in three segments. The shares were priced at 323.84 USD on 9 November 2026, giving a market capitalisation of 18.0 billion USD.

The verdict is overvalued. The P/E of 32.5x sits above its ten-year median of 27.9x, and EV/EBITDA of 20.8x sits above its median of 18.2x. The discounted cash flow gives 213.36 USD per share at a discount rate of 9.9%. The fair value band runs from 197.29 to 295.93 USD with a midpoint of 246.61 USD, a margin of safety of -23.9% at the current price. The reverse DCF implies growth of 10.5% a year, against revenue growth of 5.7% and free cash flow per share growth of 8.5% over five years.

The case rests on the balance sheet and returns. Altman Z-score is 6.25, net debt to EBITDA is 1.8x, and ROIC of 13.1% is above the WACC of 9.4%. Free cash flow conversion is 1.31x on a trailing basis. The weakest numbers are interest coverage of 7.0x, the three-year EPS decline of -1.1% a year, and the price-to-sales premium of 28.6% over its ten-year median. A slower margin or cash flow trend would widen the gap to the price.

Financial health

Financial strength is green, held up by an Altman Z-score of 6.25, net debt to EBITDA of 1.8x and a current ratio of 1.82. The quick ratio is 1.05, debt to equity is 0.555, and interest coverage of 7.0x is only neutral.

The Altman model was designed for manufacturers; Nordson is a manufacturer, so its zone of safe applies directly. Insolvency risk: low, about 0.4% by the estimate of the Ohlson model over one to two years, based on figures as of 31 October 2025. Taken together, debt is moderate and the company covers its interest comfortably, though not by a wide margin.

Earnings quality

Earnings quality is green, held up by free cash flow conversion of 1.31x on a trailing basis and 1.13x over five years, and by a Piotroski score of 7 out of 9. The accrual ratio is -3.9%, meaning reported earnings are backed by more than their accounting value in cash.

Stock-based compensation is 0.4% of revenue, and free cash flow after it is 716.3 million USD. The share count fell at a five-year compound rate of -0.5% a year, indicating net buybacks. The Beneish M-score value is not available, so manipulation risk cannot be checked on this basis. The company beat earnings expectations in 7 of the last 8 quarters, with an average surprise of 2.8%. Analysts raised current-year estimates by 3.1% over 90 days and next-year estimates by 3.5%, with no downgrades in the last 30 days.

Profitability

Profitability is green. The operating margin of 26.9% is above its ten-year median of 23.8%, and the net margin of 18.6% is above its median of 17.1%. The gross margin of 55.3% is close to its median of 55.0%.

ROIC of 13.1% against a WACC of 9.4% gives a spread of 3.6 percentage points, which the company creates value at. Five-year median ROIC is 12.3%. Return on equity is 17.0% trailing. The DuPont split shows a net margin of 17.4%, an asset turnover of 0.47 and an equity multiplier of 1.94, so about half of the equity return comes from the margin and the rest from leverage and asset use. The margin stability figure is 12.8%.

Growth

Growth is green, supported by five-year EPS growth of 14.8% a year and revenue growth in 8 of the last 10 years. Next year's EPS estimate carries growth of 8.7%.

Revenue compounds at 2.5% over three years, 5.7% over five years and 5.2% over ten years. The three-year trend is the weakest part: EPS fell at -1.1% a year over three years, while free cash flow per share grew at 13.6% a year. Ten-year EPS growth is 9.4% a year and ten-year free cash flow per share growth is 13.5% a year.

Valuation

Valuation is red. The verdict is overvalued, with a margin of safety of -23.9%. Against their own ten-year medians, the P/E of 32.5x is a premium of 16.3% over 27.9x, EV/EBITDA of 20.8x a premium of 14.2% over 18.2x, and price to sales of 6.05x a premium of 28.6% over 4.71x. Price to free cash flow of 24.8x is a discount of 2.2% against 25.3x, and price to book of 5.52x a discount of 7.0% against 5.94x.

The DCF gives 213.36 USD per share at a discount rate of 9.9%, with terminal growth of 2.5%. About 52% of its value sits in the terminal value. The fair value from historical multiples is 279.85 USD. The fair value band is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The reverse DCF implies 10.5% growth, against 5.7% revenue growth and 8.5% free cash flow per share growth over five years. The dividend yield is 1.0%, with 25.2% of free cash flow paid out.

Risks

Interest coverage of 7.0x is the weakest balance-sheet figure; a drop in operating earnings would shrink the cushion for interest payments. The three-year EPS decline of -1.1% a year would weaken the case if it persists, since the price already implies 10.5% growth.

The valuation is the main risk. The price is above the top of the fair value band and above the fair value from historical multiples. Because about 52% of the DCF sits in the terminal value, small changes in the discount rate or terminal growth change the result considerably.

Not available: the Beneish M-score value and a debt maturity schedule. This analysis has no revenue breakdown by segment, so it cannot show which of the three segments drives growth or margin.