Confluence Loads Up on 182,305 NDSN Shares in Q2 2025

Confluence Investment Management significantly increased its stake in Nordson (NDSN) during fiscal Q2 2025, adding 182,305 shares valued at $37.93 million, bringing its total holding to 336,090 shares worth $72.05 million, which now comprises 1.02% of its equity portfolio. This substantial investment highlights the fund's conviction in Nordson, a 'Dividend King' with 61 consecutive years of dividend increases, despite the stock's recent underperformance against the S&P 500. The company projects robust future growth, targeting 6-8% annual revenue and 10-12% adjusted EPS growth from 2025-2029, driven by a strategic shift towards recurring revenue and acquisitions.

Analysis

Confluence Investment Management has demonstrated strong conviction in Nordson (NDSN) by increasing its stake by 182,305 shares, bringing its total position to $72.05 million, or 1.02% of the fund's portfolio. This significant institutional purchase occurs despite Nordson's recent market underperformance, with its stock lagging the S&P 500 by 14.1 percentage points over the past year and trading 16.3% below its 52-week high. The investment thesis appears to be forward-looking, centered on the company's fundamental strengths and strategic initiatives. Nordson has successfully shifted its revenue mix, with recurring sales from parts and consumables growing to 58% of total sales in 2024 from 39% in 2014, enhancing revenue predictability. Furthermore, the company has issued strong long-term guidance for 2025-2029, projecting 6-8% annual revenue growth and 10-12% adjusted EPS growth, supported by the 2024 acquisition of Atrion and an expected $4 billion in operating cash flow. This growth outlook is complemented by its status as a 'Dividend King,' having raised dividends for 61 consecutive years, including a 15% increase last year, signaling robust cash flow and a commitment to shareholder returns.

Key Decisions for Investors

• Given the significant institutional buy-in from Confluence amidst recent stock price weakness, investors could consider the current valuation as a strategic entry point to capitalize on the company's strong long-term growth outlook.
• For income and quality-focused portfolios, Nordson's 'Dividend King' status, coupled with a 15% recent dividend hike and projections for nearly $4 billion in operating cash flow through 2029, reinforces its appeal as a reliable long-term holding.
• Monitor the company's execution on its 2025-2029 guidance for 10-12% annual EPS growth and the successful integration of the Atrion acquisition, as these are critical catalysts for closing the stock's performance gap with the market.