Thursday, February 7, 2013

Nordion Inc

I do not own this stock of Nordion Inc. (TSX-NDN, NYSE-NDZ), but I used to own it when it was called MDS Inc. I bought stock in the MDS in 1996, 1997, and 1998. I sold all my shares in 2006. On this stock, I made a total return per year of 5%. Basically, in 2006 I thought this company had lost its way and was going nowhere. I had invested in it as it was one of very few Health Care sector companies in Canada and it was considered to be a very good company at the time I bought it.

After paying some dividends in 2011 and 2012, this company has again cut the dividends to zero. To me it seems like this company just cannot get its act together. Total return is very much negative over the past 5 and 10 years with declines at 18% per year and 10.5% per year. These are heavy losses for shareholders. Shares were down by some 25% between the end of 2011 and 2012.

Outstanding shares have been decreasing as over the past 5 and 10 years at the rate of 12.8% and 7.9% per year. Shares have increased for stock options and decreased for buy backs. In 2010 they bought back some 44% of the outstanding shares and in 2012 they bought back 8% of their outstanding shares.

The heavy buyback of shares has not helped in per share values. Revenue per share growth is down by 16% and 10% per year over the past 5 and 10 years. Cash flow per share is not down as much at a decline of 3% and 7.5% per year over the past 5 and 10 years.

Return on Equity is non-existent because there was only one year of profits within the last 5 years. The only good thing to say is that debt ratios are good. The Liquidity ratio is quite good at 1.96 as is the Debt Ratio at 1.83.

I suppose you could say that the stock price is good. I do not get much of a fix on the relative stock price as it has had lots of negative EPS years lately, Book Value has been tanking and the dividend has been cut to zero. The Price/Earnings Ratio is 10.65, which is a good one. I used a stock price of $10.37 and a 2013 EPS of $0.69. The Price/Graham Price Ratio is 1.01, which shows a good price.

When I look at the analysts' recommendations, I find Strong Buy, Hold, Underperform and Sell. The consensus would be a Hold. The 12 months consensus stock price is $8.52. This implies a 15.6% capital gain. One analyst said that this company has been out of favour lately.

See CNBC article on medical isotope problems. The apprentice millionaire portfolio blogger wrote about this company in mid-December 2012. He has a more optimistic view that I do.

This company cannot seem to make money. It may not be entirely their fault; however, it still is not making money.

Nordion Inc. is a global life sciences company that provides products and services for the development of drugs and diagnosis and treatment of disease. The company is a provider of pharmaceutical contract research, medical isotopes for molecular imaging, radiotherapeutics, and analytical instruments. Its web site is here Nordion. See my spreadsheet at ndn.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.


  1. Hello Susan,
    I believe that your description of what Nordion does is incorrect.


  2. I will take a look at description.

  3. I have updated the description. Thanks for pointing this out. Sorry for the error.


  4. I believe Nordion has a black mark on their name, as they seem to be losing customers at a fast rate... For a world leader in the global isotopes manufacturing business, the current management team can't seem to attract or retain the contracts needed to keep this company afloat. Each year at year end to help the books they either layoff or sell parts of the company. When will the share holders wake up and force a change to upper management so the ship can remain upright???..