Trading Earnings: Sticking it to the Bottom Line

Nordson Corporation (NDSN) is set to discuss earnings before the market opens Thursday, December 18. With direct operations in 30 countries worldwide, Westlake, Ohio-based Nordson Corporation is the world’s leading manufacturer of systemsthat apply adhesives, sealants and coatings during manufacturing operations.

NDSN is expected to earn a profit of 84 cents for its 4th quarter. We expect the adhesive company to announce earnings that will miss investors’ and analysts’ expectations.

KeyBanc Capital Markets analyst Matt Summerville recently lowered estimates of Nordson’s earnings per share to 82 cents from 87 cents for the fiscal fourth quarter and to $3.35 from $3.41 for 2008. For 2009, he now expects earnings per share of $2.70, down from $3.85.
According to our technical analysis, this stock is poised to move following earnings and it has a history of jumping wildly following its earnings report. Last time out the stock dropped more than 25% following its quarterly check up. NDSN shares have also soared 10-15% following the call. We see it as an ideal candidate for an options straddle.

Suggested Stop Long: $25.31

Suggested Stop Short: $31.17

Filed Under: Day Trades