Manufacturing company Nordson (NASDAQ: NDSN) reported Q2 CY2025 results beating Wall Street’s revenue expectations, with sales up 12.1% year on year to $741.5 million. Its non-GAAP profit of $2.73 per share was 3.5% above analysts’ consensus estimates.

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Commenting on the Company’s fiscal 2025 third quarter results, Nordson President and Chief Executive Officer Sundaram Nagarajan said, “The Nordson team responded effectively to dynamic demand conditions in key end markets and delivered on its promises, realizing solid year-over-year organic growth in the quarter. In particular, the Advanced Technology Solutions segment delivered 15% organic sales growth. Operational excellence drove strong profit performance, increasing adjusted earnings per share by 13% and EBITDA by 15%. In this final full quarter of Atrion’s first year acquisition performance, our new employees again exceeded expectations and contributed to both sales and earnings results. Also this quarter, we maintained a strong balance sheet, delivering cash flow conversion of 180% of net income that we used to reduce debt, repurchase shares and return dividends to shareholders, while continuing to invest in the company.”

Company Overview

Founded in 1954, Nordson Corporation (NASDAQ: NDSN) manufactures dispensing equipment and industrial adhesives, sealants and coatings.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Nordson grew its sales at a tepid 5.3% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Nordson’s recent performance shows its demand has slowed as its annualized revenue growth of 3.6% over the last two years was below its five-year trend.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Nordson’s organic revenue averaged 2.8% year-on-year declines. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, Nordson reported year-on-year revenue growth of 12.1%, and its $741.5 million of revenue exceeded Wall Street’s estimates by 2.7%.

Looking ahead, sell-side analysts expect revenue to grow 4.4% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and implies its newer products and services will not accelerate its top-line performance yet.

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Operating Margin

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Nordson has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 24.9%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Analyzing the trend in its profitability, Nordson’s operating margin rose by 2.7 percentage points over the last five years, as its sales growth gave it operating leverage.

This quarter, Nordson generated an operating margin profit margin of 25.3%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Nordson’s EPS grew at a solid 10.9% compounded annual growth rate over the last five years, higher than its 5.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Nordson’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Nordson’s operating margin was flat this quarter but expanded by 2.7 percentage points over the last five years. On top of that, its share count shrank by 2.9%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Nordson, its two-year annual EPS growth of 1.2% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q2, Nordson reported adjusted EPS of $2.73, up from $2.41 in the same quarter last year. This print beat analysts’ estimates by 3.5%. Over the next 12 months, Wall Street expects Nordson’s full-year EPS of $9.99 to grow 8.1%.

Key Takeaways from Nordson’s Q2 Results

We enjoyed seeing Nordson beat analysts’ revenue expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 2.3% to $218.50 immediately after reporting.

Nordson may have had a good quarter, but does that mean you should invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.