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Roper's (ROP) Q3 Earnings and Revenues Surpass Estimates

Roper Technologies, Inc. ROP delivered third-quarter 2019 positive earnings surprise of about 3.1%.

Adjusted earnings were $3.29 per share, surpassing the Zacks Consensus Estimate of $3.19. Also, the bottom line increased 6% from the year-ago quarter number of $3.09 backed by solid revenue growth.

Inside the Headlines

Roper’s adjusted revenues totaled $1,358 million, up 3% year over year. The rise was primarily driven by 2% organic growth and 2% gain from acquired assets, partially offset by 1% adverse impact of unfavorable movements in foreign currencies. Moreover, the top line surpassed the Zacks Consensus Estimate of $1,350 million.

Notably, GAAP revenues came in at $1,354.5 million, up from the year-ago reported figure of $1,319 million.

Roper Technologies, Inc. Price, Consensus and EPS Surprise

Roper Technologies, Inc. Price, Consensus and EPS Surprise

Roper Technologies, Inc. price-consensus-eps-surprise-chart | Roper Technologies, Inc. Quote

The company reports revenues under four segments. A brief discussion of the quarterly results is provided below:

Application Software’s revenues totaled $405.4 million, representing 29.9% of the quarter’s revenues. On a year-over-year basis, the segment’s revenues grew 7.2%.

Network Software & Systems segment generated revenues of $391.2 million, accounting for roughly 28.9% of third-quarter revenues. Sales grew 14.4% year over year.

Measurement & Analytical Solutions segment generated revenues of $398.3 million, accounting for roughly 29.4% of the quarter’s top line. Sales declined 7.3% year over year.

Process Technologies segment generated revenues of $159.6 million, accounting for roughly 11.8% of the September quarter’s revenues. Sales edged down 5.5% year over year.

Margin Details

In the July-September quarter, Roper’s cost of sales increased 0.5% year over year to $480.9 million. Cost of sales was 35.5% of the quarter’s revenues compared with 36.3% a year ago. Adjusted gross profit in the quarter increased 4% to $877 million, with margin of 64.6% reflecting expansion of 80 basis points (bps).

Selling, general and administrative expenses jumped 5.6% to $488.4 million. It represented 36.1% of total revenues compared with 35.1% in the year-ago quarter. Operating profit jumped 2.7% to $430.1 million with margin of 31.8%, flat year over year.

Balance Sheet & Cash Flow

Exiting the third quarter, Roper had cash and cash equivalents of $323 million compared with $364.4 million recorded on Dec 31, 2018. Long-term debt increased 25.4% to $6,195.1 million from the end of 2018.

In first nine months of 2019, the company generated net cash of $995.6 million from operating activities, roughly 3.1% higher from the year-ago period.

Capital expenditure during the third quarter totaled $14 million, higher than the year-ago figure of $11 million. Adjusted free cash flow in the quarter was down 4% to $387 million.

Outlook

For 2019, adjusted earnings per share are anticipated to be $12.98-$13.02, higher than the $12.94-$13.06 guided earlier.

For the fourth quarter of 2019, earnings are projected to be $3.32-$3.36 per share.

Zacks Rank & Key Picks

Roper currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are Cimpress N.V CMPR, Brady Corporation BRC and Dover Corporation DOV. While Cimpress sports a Zacks Rank #1 (Strong Buy), Brady and Dover carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cimpress’ earnings surprise in the last reported quarter was a positive 137.04%.

Brady delivered average positive earnings surprise of 9.68% in the trailing four quarters.

Dover pulled off average positive earnings surprise of 6.70% in the trailing four quarters.

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