Cramer Says Nordson (NDSN) Could Fall Another 23%

Last night on Mad Money, Jim Cramer was very negative on Nordson Corporation (Nasdaq: NDSN). Last Friday, Nordson reported a quarter that was below Street expectations, and more importantly, guided down for next quarter and fell $19, to $52.67. Jimmy thinks it has at least 20% more to fall.

Cramer is a strong believer in once a growth stock misses an estimate, then the stock will be in trouble for awhile. Actually, this is what made Cramer get negative on Crocs (Nasdaq: CROX) once it missed estimates one quarter. He told Mad Money viewers to sell Crocs while it was still in the 40s, today it is trading at $4.29.

Cramer noted that Nordson had always been the go-to stock for momentum and growth buyers, but when it missed its EPS projection that all has changed. Nordson is suffering from its large exposure to housing and autos and sport utility vehicles in particular. Even Nordson's advanced technology division, supposed to be its large earnings driver, came in lower than the Street view.

Cramer thinks that management has just destroyed its credibility because it raised guidance the quarter prior and now just lowered guidance. Therefore, how can you trust management and the main reason investors picked up stock was for growth, which is now non-existent.

Nordson currently trades at 14 times forward earnings, but if you give the company a traditional cyclical valuation, it should trade around 11 times forward earnings. That brings Nordson's stock down 23% to $40.59 a share. Cramer thinks the stock will continue to fall to that $40 level.

Subscribe to EasyStockAlerts.com & Get real-time e-mail alerts when news hits your stocks!

You May Also Be Interested In