July 30, 2008 - Nordson Corp. (NDSN-NASDAQ) manufactures equipment used for precision dispensing, testing and inspection, and surface preparation and curing. The Adhesive Dispensing Systems segment manufactures equipment for applying adhesives, lotions, liquids, and fibers to disposable products; automated adhesive dispensing systems for the food and beverage, and packaged goods industries; hot melt and cold glue adhesive dispensing systems for the paper and paperboard converting industries; adhesive and sealant dispensing systems for bonding or sealing plastic, metal, and wood products; and laminating and coating systems to manufacture continuous-roll goods in the nonwovens, textile, paper, and flexible-packaging industries.

The Industrial Coating and Automotive Systems segment provides automated and manual dispensing systems used for applying coatings, paint, finishes, sealants, and other materials. Nordson Corporation markets its products in the United States and internationally through a direct sales force, as well as through qualified distributors and sales representatives. It serves various markets, including the appliance, automotive, bookbinding, container, converting, electronics, food and beverage, furniture, life sciences, medical, metal finishing, non woven, packaging, and semiconductor industries. The company was founded in 1935 and is headquartered in Westlake, Ohio.

It's a busy place, manufacturing all that stuff. And making earnings, lots of those, too. For the last 5 years, the average annual earnings growth was 15.5% while revenues averaged up 4% a year. For the next 5, analysts see 25% growth in earnings for the annual average, compared to 12.9% for the industry. Last year, the company made $2.65 a share. This year, analysts predict $3.57 and next year $4.03. Last year sales were $993 million. This year expect $1.15 billion, then $1.24 billion next year.

The company's been buying things, like other companies. Last year it bought Picodostoc and YESTech. Those two additions helped boost earnings by 40% in the first quarter (fiscal year ends in October). Orders were ahead by double digits with the Advanced Technology division leading the way with an increase of 26%. The Asia Pacific region is growing the fastest, seeing a 31% improvement in sales for the second quarter. The slowest growth was in the Americas region.

Mobile devices have been a boon for the Advanced Technology division. They continue to offer more features such as Bluetooth, GPS, Internet access, TV shows). The new technology in mobile devices requires the architecture that Nordson uses. Along with that, the Advanced Technology group introduced a new product line of platforms earlier this year. Together, new features and products, should insure continued strong growth for this division.

While Advanced Technology and the Adhesive Dispensing groups have seen increased demand, two other divisions, Idustrial Coatings and Automotive Services have not. In fact, Automotive Services is the most exposed to the weak U.S. economy. Without an uptick in the auto manufacturing group, there doesn't seem to be any reason for higher growth here.

More numbers: Very nice Return on Equity of 20.4%. Profit margin is 10%, opearting margin 16.8%. Price range for the last 52 weeks has been $42.30 to $78.98. Market cap is $2.35 billion with 33.7 million shares outstanding. Book value is $17.51. Price to Book is 4. There's a dividend of 73 cents a shares for a yield of 1%. The dividend takes 23% of earnings to pay.

Nordson is an engine that is firing on most cylinders but not all. In spite of that, earnings continue to improve with certain regions and divisions making up for weaker parts of the globe (mostly the U.S.). With good diversification, in products and geography, as well as management that delivered consistently, NDSN makes for interesting reading to investors looking for an investment in the machinery sector.

- Company Website: www.nordson.com

- Ted Allrich