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Roper Technologies Inc ROP

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Roper’s Valuation Beginning to Look Attractive Again With the Latest Market Sell-Off

Joshua Aguilar Equity Analyst

Analyst Note

| Joshua Aguilar |

Despite the headline sales miss, Roper’s fourth-quarter 2020 results were relatively in line and even slightly ahead of our expectations on both the top and bottom lines. Fourth-quarter sales were just shy of $1.51 billion, and adjusted EPS came in at $3.56 against our expectations of $1.47 billion and adjusted EPS of $3.43. While not our favorite metric, yet useful given purchase accounting dynamics, adjusted EBITDA margins came in at 36.6%, or about 10 basis points higher than we were expecting for the quarter, implying incremental margins of just under 32%.

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Company Profile

Business Description

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.

Contact
6901 Professional Parkway East, Suite 200
Sarasota, FL, 34240
T +1 941 556-2601
Sector Industrials
Industry Specialty Industrial Machinery
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 18,400

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