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Roper (ROP) Q2 Earnings Surpass Estimates, Revenues Miss

Roper Technologies, Inc. ROP reported second-quarter 2017 adjusted earnings per share of $2.24, beating the Zacks Consensus Estimate of $2.22. However, despite a 21.8% jump year over year, revenues of $1.135 billion missed the consensus mark of $1.156 billion.

Adjusted revenues grew 23.2% to $1.151 billion. Organic revenues were up 6% while orders increased 22.5% year over year to $1.172 billion at the end of the quarter.

Roper maintained that acquisitions continue to boost its performance, especially the software and network businesses like ConstructConnect and Deltek.

Segment Revenue Details

Revenues from Medical & Scientific Imaging increased 3% year over year to $350.8 million.

Revenues from RF Technology went up 59.5% from the year-ago quarter to $460.5 million.

Revenues from Industrial Technology increased 8% year over year to $192.9 million.

Also, revenues from Energy Systems & Controls grew nearly 5.6% year over year to $130.5 million.

Margins

Adjusted gross margin increased 170 basis points (bps) to 62.7%. Adjusted EBITDA was $394 million, up 26% year over year.

Balance Sheet and Cash Flow

Roper ended the quarter with approximately $663.3 million in cash and equivalents, compared with $757.2 million as on Dec 31, 2016. Long-term debt was $5.241 billion, compared with $5.809 billion as of Dec 31, 2016.

For the first six months of the year, the company’s adjusted operating cash flow was $550 million up 33% year over year.

Guidance

For third-quarter 2017, Roper Technologies expects adjusted earnings per share in a range of $2.24­–$2.30.

For 2017, the company expects adjusted earnings per share in a range of $9.12–$9.30, compared with $8.98–$9.28 per share.

Our Take

Roper’s unique asset light business model helps it not only to remain less dependent on large-scale production equipment but also to generate strong cash flow quickly.

Furthermore, Roper holds a dominant position in most of the markets where it operates. The company has an optimum mix of highly engineered, niche-oriented products, which help it to gain market share. The acquisitions of Deltek and ConstructConnect, and winning New York City’s MTA project are significant growth drivers. The company's strong dividend policy is also an added positive.

We note that Roper outperformed the industry in the last one year. The stock has increased 35.5%, compared with the industry’s gain of 26.9%.

Sluggish global macroeconomic conditions also remain heaadwinds. Stiff competition from the likes of Applied Industrial Technologies, Inc. AIT, Barnes Group Inc. B and Chart Industries Inc. GTLS is an added concern.

Currently, Roper carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Roper Technologies, Inc. (ROP): Free Stock Analysis Report
 
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Chart Industries, Inc. (GTLS): Free Stock Analysis Report
 
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