Jim:    Alright now, what do you do with a stock that's down 17 points... 23%... in one day... in one day's session?...

If the stock is Nordson Corp. (NDSN), which got polaxxed... just as I just described... well, I think you've got to sell... Sell, sell, sell!...  because it missed its quarter by 5 cents.  The Street was looking for 98 cents of earnings per share, and NDSN delivered 93 cents...

But, more importantly, its forecast for the next quarter was 16% lower than the Street was expecting...  a mid-point of 89 cents... The Street was looking for $1.05.

But then, you're probably wondering...  and this is true Wall Street knowledge...  How does a 16% miss in guidance at the company turn into a 23% decline in the stock?  It seems like reverse alchemy, doesn't it?

How is that right... for just 16 cents of missed earnings next quarter... 5.3 million fewer dollars... to destroy $600 million worth of NDSN's value as a company?  Are we just like... have we lost our minds on Wall Street?...

I mean, NDSN was a $2.4 billion company before it reported... and now it's a $1.8 billion company after?...  And then, after it went lower again today?...

I'm telling you... that it wasn't wrong at all...

I don't even believe the selling is done.   I think the company has much lower to go.

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Now the proportions seem wrong to you, don't they? Shouldn't a 16% miss mean a 16% haircut?... And not a 23% haircut, plus the additional 3.8% today?...

I mean, didn't the CEO just tell us not to worry on Erin's fabulous Street Signs show this afternoon?...

Well the CEO may be right about the company, but that's not what we care about on Mad Money... We care about the way the stock market works...

And it's not working for NDSN...

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As I see it, and I think the Street sees it... When NDSN... and it's an industrial company that makes products used to dispense sealants, adhesives for coatings for food, diapers, consumer durables, housing, auto industry... When they missed its quarter, they went from a dependable growth company that consistently beat earnings.... a growth stock that all the momentum guys wanted to own... to a stock that none of them wanted to own. Instead of being the glue for products like Depends, you now need Depends if you own it...

In one day, the company seems to have immediately lost all of its credibility and the respect of its entire share base, which is why I believe it fell 17 points on Friday, and why I think it's got more to go... because it takes a long time for the shareholder base to change. The growth guys can't get out of it all at once... you saw them hit it again today... and I think NDSN will have to be much lower, before it starts appealing to value investors.

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Now, if you just look at what the company emails are saying, you'd think that everything was almost hunky-dory... On the conference call, NDSN's management was trying to do damage control... like good politicians... focusing on very strong performance from two of our segments... and trying to ignore everything that was bad.

Even the research doesn't seem to indicate any real problems with the company. You have to read between the lines to see how a 5 cent earnings miss and 15% lower guidance can be such a disaster... This is a company where 22% of sales are housing-related... read, "miserable"... and 7% is auto-related... read, "nastola"... and the auto part SUV (i.e., large sport utility vehicles which are steadily declining in sales) which is now SVU (i.e., referring to NBC's "Special Victim's Unit)... And the results for its advanced tech segment, which serves the electronics industry, and was supposed to be a key driver of NDSN's earnings growth?... They were lower than expected too... although the company put on a good face about this division on Erin's show.

No one wants to own NDSN for inconsistent earnings in one big division... Uh uh... They were in it for consistent, double-digit performance in at least several divisions and at least some positives in the others...

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Now this is an adhesive's company that's been heavily dependent on a weak dollar to compete overseas... Adhesives?... I don't know. To me, they're a commodity... I'm sure they think it's proprietary, but that's how the Street views it... And, if it's a question of price, the strengthening dollar will likely mean that NDSN sticks to the bottom and can't bounce back...

But, to really understand the scope of this catastrophe, I think you have to look at the context of the whole year...

NDSN took its guidance up big when it reported the quarter before this one... So, when it missed earnings and guided down big on Friday, that utterly destroyed management's credibility, and killed the reason for the stock's whole advance...

NDSN is one of these companies that you thought had expanded into the rest of the world, so it seemed less vulnerable to the U.S. economy... but like a bunch of other industrial companies, including many we've liked... although I never understood the big NDSN growth story... it saw a dramatic slowing in Europe that nobody, especially not management, saw coming...

Oh boy, the analysts were caught blindsided here... they were flabbergasted... and now they're abandoning ship, as though it's the Titanic, if not the Hindenburg... with no DiCaprios among them...

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Now, like I said before, I believe NDSN is going to keep going down, because it takes a long time to change the shareholder base...

Before this abomination of a quarter of horrific guidance, NDSN's shareholder base was primarily industrial growth buyers... people who wanted to believe they could still own industrials that had moved aggressively overseas... The company had beaten its expectations so consistently that its shareholders were lulled into thinking it was a global growth story/lovey blanket...

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Suddenly, when it missed the numbers last week, it became a global mis-growth story, and you can't use any of the metrics that had given it such appeal to the growth momentum players to judge the stock anymore. They don't want to touch it now... and, at these prices, there's really no one who would...

NDSN is a hot potato... going from growth to value... and, from my experience, that trajectory is vicious!...

It could take as long as 18 months for the shareholder base to change from growth to value... and, through all that time, the stock will likely continue to get hammered. Over the last six months, the stock is still up 3.8%, so this big decline has just taken NDSN back where it was at the beginning of its run... but I think it needs to be lower than that because, now that the run is over, none of the momentum players who were buying it will have any interest in owning the stock at all.

There's typically a vast chasm between what growth and momentum players are willing to pay for a stock... and what the value guys are now willing to pay.

NDSN was trading at 17x forward earnings before it got its head cut off... Now it's trading at 14x forward earnings, and that's still not low enough...

If it got a traditional cyclical valuation, say like Caterpillar Inc. (CAT)... which is a darn good company... you get an 11x multiple for CAT... which leads to a $40.59 share price... That's 12 points below the current price. And that's where I think NDSN is going...

A good company but, in my opinion, the bottom line... 

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Jim's comments AFTER the interview:     Guys, this is a good story.  Yeah, I mean, look...  the market's so bad that I felt (you should) take some off the table...  But, you know what?  He's right.  And if the stock gets dinged all the way for the dividend, we're going to come right back and re-recommend the story.