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Reasons Why You Should Avoid Investing in Roper (ROP) Now

Roper Technologies, Inc. ROP has failed to impress investors with its recent operational performance due to persistent supply-chain constraints, raw material cost inflation and foreign-currency headwinds. These factors are likely to adversely impact its earnings in the near term.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

The currently Zacks Rank #4 (Sell) player has a market capitalization of $41.9 billion. In the past six months, the stock has lost 11.4% compared with the industry’s decline of 9.4%.

Let’s discuss the factors that might continue taking a toll on the firm.

Escalated Costs and Expenses: ROP has been struggling with increasing operating costs and expenses for some time now. In the first half of 2022, Roper’s cost of sales increased 13.4%, while selling, general and administrative expenses rose 6.7%. If not controlled, escalating costs might dent its profitability in the quarters ahead.

Supply-Chain Issues: Supply-chain constraints and raw material cost inflation raise a concern for Roper. Despite robust demand and strong backlog levels, its Technology Enabled Products segment is somewhat constrained by supply-chain challenges. Ordering activity at the Verathon and Northern Digital business within this segment is also being hampered by supply-chain disturbances.

Forex Woes: Given its widespread presence in the international markets, Roper is exposed to unfavorable foreign currency movements. In the second quarter of 2022, adverse movement in foreign currency translation hurt its sales 1%. In the quarters ahead, ROP's overseas business might be depressed by a stronger U.S. dollar.

Southbound Estimate Trend: In the past 60 days, the Zacks Consensus Estimate for 2022 earnings has been revised 13.2% downward.

Stocks to Consider

Some better-ranked companies from the Industrial Products sector are discussed below:

Applied Industrial Technologies, Inc. AIT presently sports a Zacks Rank #1 (Strong Buy). AIT delivered a trailing four-quarter earnings surprise of 22.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

AIT’s earnings estimates have increased 6.7% for fiscal 2023 (ending June 2023) in the past 60 days. Its shares have rallied 2.8% in the past six months.

Greif, Inc. GEF presently has a Zacks Rank #2 (Buy). GEF delivered a trailing four-quarter earnings surprise of 22.4%, on average.

GEF’s earnings estimates have increased 4.6% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 12.8% in the past six months.

Valmont Industries, Inc. VMI presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 13.7%, on average.

In the past 60 days, Valmont’s earnings estimates have increased 3.8% for 2022. The stock has rallied 22.3% in the past six months.

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Roper Technologies, Inc. (ROP) : Free Stock Analysis Report
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Greif, Inc. (GEF) : Free Stock Analysis Report
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