Roper Technologies, Inc. ROP delivered positive earnings and revenue surprises of 5.3% and 1%, respectively, in third-quarter 2020.
Adjusted earnings were $3.17 per share, surpassing the Zacks Consensus Estimate of $3.01. However, the bottom line decreased 3.6% from the year-ago quarter number of $3.29 per share.
Top-Line Details
Roper’s net revenues were $1,366.1 million, up 0.9% year over year. Notably, adjusted revenues totaled $1,369 million, up 1%. The increase was primarily backed by 3% gain from acquired assets, partially offset by a decrease of 3% in organic revenues. The top line beat the Zacks Consensus Estimate of $1,352 million.
The company reports revenues under four segments. A brief discussion of the quarterly results is provided below.
Application Software’s revenues totaled $447.9 million, representing 32.8% of the quarter’s top line. On a year-over-year basis, the segment’s revenues grew 10.5%.
Network Software & Systems generated revenues of $430.2 million, accounting for 31.5% of third-quarter top line. Sales grew 10% year over year.
Measurement & Analytical Solutions generated revenues of $367.9 million, accounting for 26.9% of the quarter’s top line. Sales declined 7.6% year over year.
Process Technologies generated revenues of $120.1 million, accounting for 8.8% of the quarter’s top line. Sales were down 24.7% year over year.
Roper Technologies, Inc. Price, Consensus and EPS Surprise
Roper Technologies, Inc. price-consensus-eps-surprise-chart | Roper Technologies, Inc. Quote
Margin Details
In the third quarter, Roper’s cost of sales increased 1.9% year over year to $490.2 million. Cost of sales was 35.9% of the quarter’s revenues compared with 35.5% a year ago. Adjusted gross profit increased 0.2% to $879 million, while adjusted gross margin was 64.2%, reflecting a contraction of 40 basis points (bps).
Selling, general and administrative expenses increased 4.1% to $508.3 million. It represented 37.2% of total revenues compared with 36.1% in the year-ago quarter. Operating profit declined 3.8% to $413.9 million, with margin of 30.3%, down 150 bps.
Balance Sheet & Cash Flow
Exiting the third quarter, Roper had cash and cash equivalents of $302.1 million compared with $709.7 million recorded on Dec 31, 2019. Long-term debt (net of current portion) was $9,101.2 million compared with $4,673.1 million at the end of 2019.
In the first nine months of 2020, the company generated net cash of $950.9 million from operating activities, down 4.5% year over year.
Capital expenditure during the third quarter totaled $8 million, lower than the year-ago figure of $14 million. Adjusted free cash flow in the quarter was up 14.2% to $442 million on a year-over-year basis.
Outlook
For 2020, adjusted earnings per share are anticipated to be $12.55-$12.65 compared with $11.90-$12.40 estimated earlier.
For the fourth quarter of 2020, earnings are projected to be $3.39-$3.49 per share.
Zacks Rank & Other Stocks to Consider
The company currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the same space are Kaman Corporation KAMN, Dover Corporation DOV and IDEX Corporation IEX. While Kaman sports a Zacks Rank #1 (Strong Buy), Dover and IDEX carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kaman delivered a positive earnings surprise of 30.42%, on average, in the trailing four quarters.
Dover delivered a positive earnings surprise of 18.10%, on average, in the trailing four quarters.
IDEX delivered a positive earnings surprise of 3.66%, on average, in the trailing four quarters.
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