After a dismal third quarter,
Roper Industries Inc.
) bounced back strongly in the fourth quarter of 2013. Earnings
jumped 14.5% year over year to $1.65 per share and also beat the
Zacks Consensus Estimate by a nickel.
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Revenues increased 9.8% year over year of $889.2 million, which
was slightly better than the Zacks Consensus Estimate of $882.0
million. Net orders surged 15.5% year over year to $900.0
The strong year-over-year growth in revenues was driven by
better-than-expected sales growth in Medical & Scientific
Imaging and RF Technology.
Revenues from Medical & Scientific Imaging (28.9% of
revenues) soared 17.9% year over year to $256.5 million, while RF
Technology revenues (26.7% of revenues) jumped 12.9% from the
year-ago quarter to $237.6 million.
Energy Systems & Controls revenues (22.0% of total revenue)
increased 6.1% year over year to $195.9 million. Revenues from
Industrial Technology (22.4% of total revenue) increased a modest
1.0% from the year-ago quarter to $199.1 million.
Gross margin increased 240 basis points (bps) from the year-ago
quarter to 60.0%, driven by a higher revenue base.
Segment-wise, Medical & Scientific Imaging margin expanded
790 bps to 71.8%, while RF Technology margin increased 130 bps to
54.4%. Energy Systems & Controls segment margin increased 90
bps in the quarter. However, this growth was partially offset by
270 bps decline in Industrial Technology margin.
Selling, general & administrative (SG&A) expense
increased 110 bps from the year-ago quarter to 30.9%. Higher
revenues and gross margin expansion drove operating margin in the
Segment operating margin improved 160 bps on a year-over-year
basis to 31.8%. Medical & Scientific Imaging margin expanded
610 bps to 34.6%, while RF Technology margin increased 230 bps to
29.3%. Energy Systems & Controls segment margin increased 20
bps, but Industrial Technology margin declined 320 bps in the
Net income margin expanded 90 bps from the year-ago quarter to
18.6% in the reported quarter.
Roper ended the fourth quarter with $459.7 million in cash and
equivalents and $2.45 billion in total debt. Free cash flow in
the quarter was $227.0 million.
For fiscal 2014, Roper expects earnings in the range of $6.05 to
$6.25 per share. Currently, the Zacks Consensus Estimate for
fiscal 2014 is pegged at $6.25, which is in line with the
higher-end of the company's guided range.
We believe that a strong backlog coupled with robust organic
growth will drive earnings growth. Moreover, accretive
acquisitions will expand the company's product portfolio,
providing a significant competitive edge over its peers.
However, macroeconomic concerns, integration issues due to
acquisitions and competition from
) are significant headwinds. Moreover, higher debt level is a
major concern, going forward.
Currently, Roper has a Zacks Rank #4 (Sell).