Roper Technologies, Inc. ROP yesterday announced the pricing of $600 million worth of senior notes. Subject to the fulfillment of customary conditions, the public offering of notes is expected to close on Jun 22, 2020.
It is worth mentioning here that the company’s shares lost 1% yesterday, ending the trading session at $401.90.
Inside the Headlines
As mentioned, the notes — considered as Roper’s senior unsecured obligations — are due to expire on Jun 30, 2030, and carry a coupon rate of 2.000%. It has been offered at 98.877% of the principal amount. Interest on notes will be paid semi-annually, each on Jun 30 and Dec 30. The first interest payment will be made on Dec 30, 2020.
Notably, the issuer has the option to redeem the senior notes before Mar 30, 2030, for a consideration equal to Treasury+20 basis points and accrues interest, if applicable. Further, the notes can be redeemed on or after Mar 30, 2030, for a value equal to par value and accrued interest.
Notably, the offering has been rated Baa2 (Stable) by Moody’s and BBB+ (Stable) by S&P.
Roper will use funds raised from the notes offering for general corporate purposes (that includes acquisitions).
We believe that the offerings of senior notes will increase the company’s debts and in turn, might inflate its financial obligations and hurt profitability. Exiting the first quarter of 2020, its long-term debts were at $4,673.1 million, reflecting a slight increase from the previous quarter. Its interest expenses totaled $45.4 million in the quarter, reflecting a year-over-year increase of 3.9%.
Zacks Rank, Estimate Trend and Price Performance
With a market capitalization of $42.4 billion, Roper currently carries a Zacks Rank #3 (Hold). The company is likely to gain from strengthening medical product and network software businesses, cost-control measures and strong operational execution. However, it is wary about the adverse impacts of the pandemic on project timings and demand for products.
In the past 60 days, the Zacks Consensus Estimate for its earnings has been lowered by 5.1% to $12.16 for 2020 and by 3.6% to $12.96 for 2021.
Roper Technologies, Inc. Price and Consensus
Roper Technologies, Inc. price-consensus-chart | Roper Technologies, Inc. Quote
In the past three months, the company’s share price has increased 17.6% compared with the industry’s growth of 6.2%.
Stocks to Consider
Three better-ranked stocks in the industry are Altra Industrial Motion Corp. AIMC, Applied Industrial Technologies, Inc. AIT and DXP Enterprises, Inc. DXPE. All these stocks presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for these stocks have improved for the current year. Further, positive earnings surprise for the last reported quarter was 47.73% for Altra Industrial, 2.00% for Applied Industrial and 55% for DXP Enterprises.
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