Roper Technologies, Inc. ROP yesterday announced the completion of $600 million worth of senior notes offering. Notably, the public offering of notes was originally announced by the company on Jun 8.
It is worth mentioning here that Roper’s shares gained 2.4% yesterday, ending the trading session at $400.04.
Inside the Headlines
As mentioned, the notes were offered at 98.877% of the principal amount and are now the company’s senior unsecured obligations. The maturity date of the notes is Jun 30, 2030, while its coupon rate is 2.000%. Interest on notes will be paid out 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 was 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 include 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 rise of 3.9%.
Zacks Rank, Estimate Trend and Price Performance
With a market capitalization of $40.8 billion, Roper currently carries a Zacks Rank #3 (Hold). Strengthening medical product and network software businesses as well as cost-control measures and strong operational execution are boons for the company. However, the impact of the pandemic on product demand and timing of projects might be harmful.
In the past three months, the company’s share price has increased 41.5% compared with the industry’s growth of 22.5%.
However, 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 in the past 60 days. Notably, there were five downward revisions and one upward revision for 2020, while four downward and one upward revision were recorded for 2021.
Roper Technologies, Inc. Price and Consensus
Roper Technologies, Inc. price-consensus-chart | Roper Technologies, Inc. Quote
Stocks to Consider
Three better-ranked stocks in the industry are Altra Industrial Motion Corp. AIMC, Applied Industrial Technologies, Inc. AIT and ParkerHannifin Corporation PH. While both Altra Industrial and Applied Industrial sport a Zacks Rank #1 (Strong Buy), ParkerHannifin carries a Zacks Rank #2 (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 29.20% for ParkerHannifin.
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