Nordson CorporationNDSNNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $207.08 per share(market-calibrated)

-29.1%

Upside to Fair Value

Current

$292.18

Pure Model

$198.41

Fair Value

$207.08

Bull Case

$240.51

Bear Case

$160.00

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

5.10%

Calibrated Growth

2.96%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $198.41.

What's Driving This Ratingfor NDSN

✓

CapEx already efficient

CapEx at 1.77% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 26.07% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 5.62% revenue growth, fading to 2.25% by Year 10. Revenue reaches $3.8B (vs $2.8B today).

🎯

Market pricing in higher long-term growth

To justify $292.18, the market implies 5.10% perpetual growth — 285bps above the model's 2.25%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 76.09% indicates efficient cash generation. FCF reaches $883M by Year 10 (23.12% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.00

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.01%

Cost of Debt

Pre-tax Cost of Debt2.76%

Tax Rate18.94%

After-tax Cost of Debt2.24%

Equity Weight (E/V)88.46%

Debt Weight (D/V)11.54%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (88.46% × 9.01%) + (11.54% × 2.24%)

= 8.23%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$2.9B	$3.2B	$3.4B	$3.6B	$3.8B
EBIT	$769M	$843M	$891M	$931M	$996M
Tax	$146M	$160M	$169M	$176M	$189M
NOPAT	$623M	$683M	$722M	$755M	$807M
+ Depreciation	$127M	$140M	$147M	$154M	$165M
- Capex	$52M	$57M	$60M	$63M	$68M
- Δ NWC	$40M	$35M	$19M	$20M	$21M
Free Cash Flow	$658M	$730M	$790M	$826M	$883M
Discount Factor	0.924	0.789	0.673	0.575	0.454
Present Value	$608M	$576M	$532M	$475M	$400M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$883M

Terminal Growth Rate2.25%

WACC8.23%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$15.1B

PV of Terminal Value$6.9B

Exit Multiple Method

Year 10 EBITDA$1.2B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$20.9B

PV of Terminal Value$9.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$5.1B

PV of Terminal Value$6.9B

Enterprise Value$12.0B

(-) Net Debt$2.0B

Equity Value$9.9B

Shares Outstanding57M

Price per Share$175.24

Exit Multiple Method

PV of Projected FCFs$5.1B

PV of Terminal Value$9.5B

Enterprise Value$14.6B

(-) Net Debt$2.0B

Equity Value$12.5B

Shares Outstanding57M

Price per Share$221.58

Pure Model Fair Value

$198.41

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
6.23%	$250.95	$261.11	$273.82	$290.19	$312.05
7.23%	$216.21	$222.56	$230.20	$239.53	$251.22
8.23%	$189.23	$193.46	$198.41	$204.25	$211.27
9.23%	$167.37	$170.33	$173.70	$177.60	$182.15
10.23%	$149.15	$151.28	$153.68	$156.40	$159.51

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$160.00

-45.2% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.25

Base Case

$198.41

-32.1% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.00

Bull Case

$240.51

-17.7% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.85

Key Assumptions & Drivers• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth5.62%

Year 3 Revenue Growth4.48%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin26.07%

Tax Rate18.94%

Historical Capex / Rev1.77%

NWC / Revenue25.45%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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