Critical Survey: Flowserve (NYSE:FLS) & Nordson (NASDAQ:NDSN)

Nordson (NASDAQ:NDSN) and Flowserve (NYSE:FLS) are both industrials companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, risk, profitability and valuation.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Nordson and Flowserve, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nordson	0	4	5	0	2.56
Flowserve	0	3	8	0	2.73

Nordson currently has a consensus target price of $311.29, indicating a potential upside of 7.90%. Flowserve has a consensus target price of $87.70, indicating a potential upside of 17.35%. Given Flowserve’s stronger consensus rating and higher probable upside, analysts plainly believe Flowserve is more favorable than Nordson.

Institutional and Insider Ownership

72.1% of Nordson shares are held by institutional investors. Comparatively, 93.9% of Flowserve shares are held by institutional investors. 0.8% of Nordson shares are held by company insiders. Comparatively, 0.7% of Flowserve shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Nordson pays an annual dividend of $3.28 per share and has a dividend yield of 1.1%. Flowserve pays an annual dividend of $0.88 per share and has a dividend yield of 1.2%. Nordson pays out 35.0% of its earnings in the form of a dividend. Flowserve pays out 32.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Nordson has raised its dividend for 62 consecutive years and Flowserve has raised its dividend for 1 consecutive years. Flowserve is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Nordson has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500. Comparatively, Flowserve has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500.

Profitability

This table compares Nordson and Flowserve’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nordson	18.19%	20.08%	10.39%
Flowserve	7.61%	21.46%	8.54%

Earnings & Valuation

This table compares Nordson and Flowserve”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nordson	$2.79 billion	5.76	$484.47 million	$9.38	30.76
Flowserve	$4.73 billion	2.02	$346.25 million	$2.70	27.68

Nordson has higher earnings, but lower revenue than Flowserve. Flowserve is trading at a lower price-to-earnings ratio than Nordson, indicating that it is currently the more affordable of the two stocks.

Summary

Flowserve beats Nordson on 9 of the 17 factors compared between the two stocks.

About Nordson

Nordson Corporation engineers, manufactures, and markets products and systems to dispense, apply, and control adhesives, coatings, polymers, sealants, biomaterials, and other fluids worldwide. It operates through three segments: Industrial Precision Solutions; Medical and Fluid Solutions; and Advanced Technology Solutions. The Industrial Precision Solutions segment provides dispensing, coating, and laminating systems for adhesives, lotions, liquids, and fibers to disposable products and roll goods; automated adhesive dispensing systems used in packaged goods industries; components and systems used in the thermoplastic and biopolymer melt stream; precision agriculture spraying solutions; fluid components, such as nozzles, pumps, and filters; and product assembly systems for use in paper and paperboard converting applications, and manufacturing roll goods. It also offers automated and manual dispensing products and systems for cold materials, container coating, liquid finishing, and powder coating, as well as ultraviolet equipment used primarily in curing and drying operations. The Medical and Fluid Solutions segment offers medical devices, including cannulas, catheters, and medical balloons; single-use plastic components; precision manual and semi-automated dispensers; minimally invasive interventional delivery devices; and plastic molded syringes, cartridges, tips, and fluid connection components. The Advanced Technology Solutions segment provides automated dispensing systems for the attachment, protection, and coating of fluids, as well as related gas plasma treatment systems for cleaning and conditioning surfaces; and bond testing and automated optical, acoustic microscopy, and x-ray inspection systems for use in semiconductor and printed circuit board industries. The company markets its products through direct sales force, as well as distributors and sales representatives. Nordson Corporation was founded in 1909 and is headquartered in Westlake, Ohio.

About Flowserve

Flowserve Corporation designs, manufactures, distributes, and services industrial flow management equipment in the United States, Canada, Mexico, Europe, the Middle East, Africa, and the Asia Pacific. It operates through Flowserve Pump Division (FPD) and Flow Control Division (FCD) segments. The FPD segment offers custom and pre-configured pumps and pump systems, mechanical seals, auxiliary systems, replacement parts, upgrades, and related aftermarket services; and equipment services, including installation and commissioning services, seal systems spare parts, repairs, advanced diagnostics, re-rate and upgrade solutions, retrofit programs, and machining and asset management solutions, as well as manufactures a gas-lubricated mechanical seal for use in high-speed compressors for gas pipelines and in the oil and gas production and process markets. The FCD segment provides engineered and industrial valve and automation systems, including isolation and control valves, actuation, controls, and related equipment; and equipment maintenance services for flow control systems, including advanced diagnostics, repair, installation, commissioning, retrofit programs, and field machining capabilities. This segment's products are used to control, direct, and manage the flow of liquids, gases, and multi-phase fluids. It primarily serves oil and gas, chemical and pharmaceuticals, power generation, and water management markets, as well as general industries, including mining and ore processing, pulp and paper, food and beverage, and other smaller applications. The company distributes its products through direct sales, distributors, and sales representatives. Flowserve Corporation was founded in 1790 and is headquartered in Irving, Texas.