Analyzing Nordson (NASDAQ:NDSN) and Flowserve (NYSE:FLS)

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

Analyst Recommendations

This is a breakdown of current recommendations for Flowserve and Nordson, as provided by MarketBeat.

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

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

Insider and Institutional Ownership

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

Risk and Volatility

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

Earnings & Valuation

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

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

Nordson has lower revenue, but higher earnings 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.

Dividends

Flowserve pays an annual dividend of $0.88 per share and has a dividend yield of 1.2%. Nordson pays an annual dividend of $3.28 per share and has a dividend yield of 1.1%. Flowserve pays out 32.6% of its earnings in the form of a dividend. Nordson pays out 35.0% 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. Flowserve has increased its dividend for 1 consecutive years and Nordson has increased its dividend for 62 consecutive years. Flowserve is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

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

Summary

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

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.

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.