Roper Technologies, Inc. ROP recently inked a deal to acquire Transact Campus, Inc. (Transact). The transaction is valued at $1.5 billion (including a $100 million tax benefit). Roper will finance the acquisition with its existing cash and revolving credit facility.
Roper’s shares gained 0.4% on the last trading day to eventually close the trading session at $548.50.
Based in Scottsdale, AZ, Transact is an app-based campus transaction processing solution provider. It enables students to do cashless transactions on and off campus. It also provides security management, college store management, automated classroom and event attendance monitoring, electronic payments and tuition payment plans.
Acquisition Rationale
The latest buyout is in sync with Roper’s policy of acquiring businesses to expand its market share and customer base. The inclusion of Transact’s expertise in campus technology and payment solutions will enable the company to retain customers and achieve excellent cash conversion.
Transact will be incorporated into the company’s CBORD business, which provides foodservice, nutrition, access and security and campus commerce solutions to acute healthcare and senior living facilities, higher education institutions and K-12 school districts. The new company will use both the Transact and CBORD brand names.
Subject to regulatory approvals and customary closing conditions, the acquisition is expected to close in the immediate future. The company expects the buyout to be cash-earnings per share accretive in the first full year of possession.
Transact is anticipated to generate revenues of approximately $325 million and EBITDA of $105 million in 2025. Roper anticipates that Transact will achieve sustained high single-digit organic revenue growth over the long term.
Zacks Rank and Price Performance
ROP currently carries a Zacks Rank #3 (Hold).
Roper is benefiting from strength across its segments. Momentum across the Deltek, Vertafore, PowerPlan and Aderant businesses is aiding the Application Software unit.
In the past year, the stock gained 12.8% compared with the industry’s 18.3% growth.
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Rising expenses, related to supply-chain issues and other factors, are pressuring ROP’s bottom line. The company’s aggressive acquisition-focused growth strategy is raising debt levels, which might drain its profitability.
Stocks to Consider
Better-ranked companies from the same space are discussed below.
Cerence Inc. CRNC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CRNC delivered a trailing four-quarter average earnings surprise of 83.6%. In the past 60 days, the Zacks Consensus Estimate for Cerence’s fiscal 2024 earnings has increased 15%.
ServiceNow, Inc. NOW presently sports a Zacks Rank of 1. The company delivered a trailing four-quarter average earnings surprise of 11.2%.
In the past 60 days, the consensus estimate for NOW’s 2024 earnings has increased 2.2%.
Unisys Corporation UIS currently sports a Zacks Rank of 1. UIS delivered a trailing four-quarter average earnings surprise of 87.7%.
In the past 60 days, the Zacks Consensus Estimate for Unisys’ 2024 earnings has increased more than 100%.
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Unisys Corporation (UIS) : Free Stock Analysis Report
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
Cerence Inc. (CRNC) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
