Nordson and Thermo Fisher,
Screened and Read

Nordson (NDSN) and Thermo Fisher (TMO) are both held by the US halal ETFs I track and compare elsewhere on this site. Thermo Fisher is a meaningful position in the largest of them, SP Funds' SPUS, at about 0.7% of the fund (a top-25 holding); Nordson, a smaller mid-cap, sits further down the same portfolio. Both are also constituents of the S&P 500 Shariah and FTSE USA Shariah indices that the major halal funds follow. When a fund you own holds a company, it is worth knowing what is actually inside it. So this is a closer look at two of those holdings: I run each through my halal screen to confirm it stands on its own, then work through five years of its financial statements. The screen comes first. If a company fails an ethical screen, it is excluded before any financial analysis.

The conclusion up front: both are halal-eligible, and both are sound, cash-generative businesses, which is reassuring given that index-tracking halal funds hold them automatically. They are not the same investment. Nordson is the higher-quality business; Thermo Fisher is the stronger recovery and scale story. For both, the main risk sits on the balance sheet, where acquisition goodwill now matches or exceeds book equity.

Running the Screen

The screen is a sequence of gates. The four exclusions apply to what the company primarily does, not to a trace exposure. Nordson makes precision dispensing, test, and surface-treatment equipment, plus medical fluid components. Thermo Fisher is the leader in life-science tools, reagents, diagnostics, and pharma services. Neither has gambling, alcohol, weapons, or banking as a primary activity, so both pass.

The lending screen does the most work, and it is the one most often missed, because it requires reading the filing rather than trusting the sector label. I checked the segment disclosures in each 10-K. Neither company reports a finance, lending, or insurance segment. Nordson's segments are all equipment and consumables; Thermo Fisher's are all products and services. Any customer financing is incidental, not a revenue line. Both pass. This is worth rechecking each year, since a new finance arm would change the result.

Both also clear the debt ceiling, with interest-bearing debt below 33% of the trailing 24-month average market cap, and neither earns meaningful non-compliant income. The ratios above are indicative, calculated from current debt against an approximate average cap, and should be recomputed against the true trailing-average figure before acting. Thermo Fisher carries more debt in absolute terms; it would only approach the limit if its market cap roughly halved while debt held. That is a point to watch, not a current fail.

Nordson — Five-Year Three-Statement Quality

Nordson's income statement is notably steady for an industrial. Revenue grew about 4.3% a year over the five years, but the more important figure is the margin: operating margin stayed in a tight 25–27% band throughout, including the soft electronics and medical year in 2024. That stability comes from a large base of recurring consumables and parts, plus disciplined cost control. The one clear deterioration is interest expense, which more than quadrupled from $25M to $104M after the ARAG and Atrion acquisitions were debt-funded. That is a structural cost, not a cyclical one.

This has continued into the current year. In the most recent quarter (Q2 FY2026, ended April 2026), revenue rose 8.5%, the operating margin held at 26.6%, and diluted EPS rose to $2.09 from $1.97. First-half operating cash flow was 128% of net income. The profile from the five-year record, strong margins and high cash conversion, remains intact.

The Cash-Flow Test

The key quality check is whether operating cash flow keeps pace with net income. When a company reports strong earnings but weak cash flow over time, it usually signals a problem: aggressive revenue recognition, channel stuffing, or non-cash charges masking a decline. Cash is harder to manage than reported earnings. Nordson passes this test cleanly. Operating cash flow met or exceeded net income in every one of the five years, averaging about 124% and reaching 148% in FY2025. The $661M free-cash-flow figure often quoted for FY2025 is simply operating cash flow of $719M less about $58M of capex. Over the five years, $2,407M of reported net income converted to $2,976M of operating cash. The business is not capital-intensive, so free cash flow is strong as well. There is no sign of the earnings-without-cash pattern the screen is designed to catch.

The Balance Sheet

Debt rose to fund acquisitions but was reduced through FY2025: total debt ended the year at about $2.0B against $3.0B of equity, a debt-to-equity ratio near 0.66, with comfortable interest coverage. The item to flag is goodwill. At $3.3B, it now exceeds shareholders' equity (1.09×) and is 56% of total assets. It grew 93% over the five years, from $1.71B, through the CyberOptics, ARAG, and Atrion acquisitions. In practical terms, the tangible operating business is small relative to what Nordson paid for its acquisitions, and a goodwill write-down would reduce equity directly. The most recent quarter shows the same position: goodwill of $3.33B against $3.20B of equity, or 1.04×. It is the one real caution on an otherwise high-quality business, and the main thing to watch in future filings.

Thermo Fisher — Five-Year Three-Statement Quality

Thermo Fisher's five-year income statement reflects a return to normal after COVID. FY2021 was a peak year, with testing demand lifting the operating margin to 25.6%. Revenue rose to about $45B in 2022 and then settled, while the operating margin fell from 25.6% to about 16% and has recovered only partially, to 17.4%. Revenue growth from 2021 to 2025 (about 3.2% a year) is real but supported by acquisitions and an easy comparison; organic growth was only about 2% in 2025. This is a business working through the end of a demand boom rather than compounding steadily. The gap between GAAP and adjusted earnings is also wider than Nordson's, about 29% ($17.74 versus $22.87 per share), because Thermo Fisher is more acquisitive. That gap matters: the more of adjusted profit that depends on adding back acquisition amortisation, the more reported quality relies on those acquisitions performing.

The recent quarter is more encouraging than the five-year averages suggest. In the most recent quarter (Q1 FY2026, ended March 2026), revenue rose 6.2%, net income 9.6%, and diluted EPS 11.3%, with the operating margin holding near 17%. After two slower years, growth is picking up again, which is the most positive signal in the current data.

The Cash-Flow Test

Thermo Fisher passes the cash test: operating cash flow exceeded net income in all five years, averaging about 129%, so there is no earnings-without-cash concern. The point to note is the direction. Operating cash flow fell from $9.31B in 2021 to $7.82B in 2025, a 16% decline, while reported net income held roughly flat. The cause is benign, mainly COVID-era working-capital tailwinds unwinding as margins normalised, but it does mean cash generation is trending down. That matters for a business whose case rests on steady compounding.

The Balance Sheet

The exact filings correct a point that rougher data gets wrong, and the most recent quarter adds to it. Thermo Fisher's balance sheet is dominated by acquisition goodwill: $49.4B at the end of 2025, about 45% of total assets, plus roughly $15.8B of net intangibles. Close to 60% of the asset base is carried from past deals rather than operating assets. Across FY2021 to FY2025, however, the trend was not worsening: goodwill grew only about 18% (from $41.9B), and because equity grew faster, goodwill relative to equity eased from 1.03× to 0.92×. The pattern is episodic rather than steady: goodwill is stable between deals, then steps up when a large one closes.

That is what just happened. In Q1 FY2026, Thermo Fisher closed the Clario acquisition and goodwill rose $5.8B in a single quarter to $55.2B, with intangibles increasing to $19.1B. Against Q1 equity of $51.9B, that puts goodwill back above book equity, at 1.06×, reversing the earlier improvement. The accurate description is neither worsening nor benign: the goodwill load is large and permanent, stable between deals and stepping up when the company makes a large acquisition. The question that matters is whether those acquisitions generate enough cash to justify the price paid. With operating cash flow down 16% over five years, they have not yet done so, and Clario raises the bar again.

Side by Side

The exact filings make the differences clear. Both convert earnings to cash, but Nordson is the cleaner business: its operating margin held in the 25–27% band throughout, while Thermo Fisher's fell from 26% to 16% and has only partly recovered, and Nordson's cash conversion is rising (148% in FY2025) while Thermo Fisher's is trending down. Thermo Fisher is the better scale and recovery story: it is about sixteen times larger, far more liquid, and growing again (Q1 FY2026 revenue +6%, EPS +11%). Both have acquisition-built balance sheets where goodwill meets or exceeds book equity — the difference is the shape of the trend, not the level.

Where They Belong

The point of this exercise was to look through two of the ETFs' larger holdings and see what they hold up to. Four questions, in order.

Does the screen rule either out? No. Both clear the four exclusions and both debt ratios, and both convert earnings to cash above 100% every year. Nothing here disqualifies them.

What kind of exposure are they? Both are large, liquid S&P 500 names, and the factor regressions confirm it: neither carries a meaningful profitability (RMW) loading. Nordson tracks the broad market, and Thermo Fisher leans toward growth. In other words, they behave like core market exposure, which is exactly the role they play inside SPUS and HLAL. That is the right way to own them, and it is already how the ETFs hold them.

Is one stronger than the other? They are not the same. Nordson is the better business on the numbers: steady 25–27% margins and rising cash conversion (148% in FY2025, 128% in the latest half-year). Thermo Fisher has the edge on scale and momentum: much larger, more liquid, and growing again (Q1 FY2026 revenue +6%, EPS +11%) after its slower period. Both are sound holdings, and their place in the halal index funds looks well-founded on this evidence.

What is the main risk? The same for both, and it is on the balance sheet. Goodwill now matches or exceeds book equity at each company: Nordson at 1.09× and rising, Thermo Fisher back to 1.06× after Clario. Reported earnings are cash-backed today, but a large write-down at either would reduce equity directly, and Thermo Fisher has just raised the bar its acquisitions must clear. Goodwill relative to equity, and any impairment language in the filings, is the most important thing to monitor, more than revenue or margin.

The takeaway is straightforward. These are two names the halal ETFs hold, Thermo Fisher among the larger US positions and Nordson a smaller one, and on a closer look both earn their place: clean on the ethical screen, strong on cash generation, and sound businesses. The one thing to keep watching, for both, is goodwill relative to equity. Holding them through the funds, as most investors already do, remains the sensible way to own them.