1-Star Price
PREMIUM
5-Star Price
PREMIUM
Economic Moat
PREMIUM
Capital Allocation
PREMIUM
Nothing in wide-moat-rated Roper Technologies’ third-quarter earnings results fundamentally alters our long-term view of the firm. As it pertains to Roper’s earning power, we mistimed the inclusion of cash flows from both acquisitions and Transcore’s congestion infrastructure project, but with puts and takes in our model, this was more than offset by time value of money (which added about 1.5% to our valuation since our last update).
Roper is a diversified technology company that operates out of four segments: application software; network software and systems; measurement and analytical solutions; and process technologies. The firm’s culture emphasizes acquiring asset-light, cash-generative businesses. Roper then reinvests this excess cash in businesses that yield incrementally higher rates of return. While the firm’s businesses are managed in a decentralized manner, Roper does not passively manage its portfolio. Instead, Roper manages its businesses through the Socratic method and empowers decision-makers through group executive coaching. Roper has now rotated a clear majority of its business from legacy industrial products into technology software in mature, niche markets with large quantities of deferred revenue.
