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Roper (ROP) Earnings Surpass Estimates in Q1, Decline Y/Y

Zacks Equity Research

Roper Technologies, Inc. ROP has delivered a positive earnings surprise of 7% in first-quarter 2020.

Adjusted earnings were $3.05 per share, surpassing the Zacks Consensus Estimate of $2.85. However, the bottom line decreased 7.6% from the year-ago quarter number of $3.30 per share.

Inside the Headlines

Roper’s net revenues were $1,350.7 million, up 5% year over year. Notably, adjusted revenues totaled $1,353 million, up 5% year over year. The rise was primarily driven by 4% organic growth and 2% gain from acquired assets. Also, the top line beat the Zacks Consensus Estimate of $1,286 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 $405.1 million, representing 30% of the quarter’s revenues. On a year-over-year basis, the segment’s revenues grew 6.3%.

Network Software & Systems generated revenues of $438.2 million, accounting for 32.4% of first-quarter revenues. Sales grew 26.6% year over year.

Measurement & Analytical Solutions generated revenues of $365.2 million, accounting for roughly 27% of the quarter’s revenues. Sales declined 9.1% year over year.

Process Technologies generated revenues of $142.2 million, accounting for 10.6% of the quarter’s revenues. Sales were down 10.3% year over year.

Margin Details

In the first quarter, Roper’s cost of sales increased 3.6% year over year to $493.9 million. Cost of sales was 36.6% of the quarter’s revenues compared with 37% a year ago. Adjusted gross profit increased 6% to $859 million, with margin of 63.5% reflecting an expansion of 50 basis points (bps).

Selling, general and administrative expenses increased 9.3% to $507.6 million. It represented 37.6% of total revenues compared with 36.1% in the year-ago quarter. Operating profit improved 2.3% to $393.6 million, with margin of 29.1%, down 80 bps year over year.

Balance Sheet & Cash Flow

Exiting the first quarter, Roper had cash and cash equivalents of $999.8 million compared with $709.7 million recorded on Dec 31, 2019. Long-term debt was $4,674.2 million compared with $4,673.1 million at the end of 2019.

In the first three months of 2020, the company generated net cash of $363.9 million from operating activities, up 25.4% year over year.

Capital expenditure during the first quarter totaled $7.9 million, lower than the year-ago figure of $15.8 million. Adjusted free cash flow in the quarter was up 13% to $353 million on a year-over-year basis.

Outlook

For 2020, adjusted earnings per share are anticipated to be $11.60-$12.60.

For the second quarter of 2020, earnings are projected to be $2.50-$2.70 per share.

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks are Intellicheck, Inc. IDN, Broadwind Energy, Inc. BWEN and Acco Brands Corporation ACCO. All the companies presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intellicheck delivered a positive earnings surprise of 36.91%, on average, in the trailing four quarters.

Broadwind delivered a positive earnings surprise of 10.42%, on average, in the trailing four quarters.

Acco Brands delivered a positive earnings surprise of 19.04%, on average, in the trailing four quarters.

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