U.S. Markets closed

Roper (ROP) to Report Q3 Earnings: What's in the Offing?

Zacks Equity Research

Roper Technologies, Inc. ROP is scheduled to report third-quarter 2019 results on Oct 24, before market open.

The company delivered better-than-expected results in each of the trailing four quarters, the average positive earnings surprise being 6.92%. Notably, in the last reported quarter, the company’s earnings of $3.07 surpassed the Zacks Consensus Estimate of $3.04.

In the past three months, the company’s shares have lost 9.8% compared with the industry’s decline of 3.2%.

Let’s see how things are shaping up for this announcement.

Key Factors

Rising cost of sales and operating expenses pose a persistent concern for Roper. In second-quarter 2019, its cost of sales inched up 0.5% year over year, and operating expenses rose 4.3%. We believe that high costs and expenses are likely to have adversely impacted its margin and profitability in the to-be-reported quarter as well.

Weakness in its upstream oil and gas businesses is expected to have led to softness in Roper’s Process Technologies segment in the third quarter. Also, the company’s policy of making large number of acquisitions might have added to integration risks. Moreover, in order to retain competitive power, the company has made heavy innovation investments, which might have added to its aggregate debt level.

Moreover, the company expects its tax rate to remain high at about 21% for the second half of 2019, which is expected to be reflected in third-quarter results.

However, Roper is likely to have benefited from growing adoption of Deltek business’ enterprise software offerings like Vantagepoint, and strength in Strata business, led by solid bookings for cost accounting and Decision Support SaaS products in hospital market. In addition, strength in DAT, iTrade, MHA and SoftWriters businesses is likely to have boosted the company’s revenues.

Amid this backdrop, the Zacks Consensus Estimate for third-quarter revenues of Roper's Application Software segment is pegged at $397 million, indicating growth of 1.5% from the prior-quarter reported number. The consensus mark for Measurement & Analytical Solutions segment’s revenues stands at $418 million, implying 2.5% sequential increase. The consensus estimate for Network Software & Systems segments’ third-quarter revenues is pegged at $387 million, up 5.4% from the second-quarter reported figure while the same for Process Technologies segment is $163 million, implying a decline of 1.2%.

Earnings Whispers

According to our quantitative model a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or at least 3 (Hold) to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

But that is not the case here as we will see below.

Earnings ESP: Roper has an Earnings ESP of +0.06%.

Roper Technologies, Inc. Price and EPS Surprise

Roper Technologies, Inc. Price and EPS Surprise

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

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

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right mix of elements to beat estimates this earnings season:

Cintas Corporation CTAS has an Earnings ESP of +0.16% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Welbilt, Inc. WBT has an Earnings ESP of +1.01% and a Zacks Rank of 3.

Sealed Air Corporation SEE has an Earnings ESP of +2.40% and a Zacks Rank #3.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”

Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.50% per year. So be sure to give these hand-picked 7 your immediate attention.

See them now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Sealed Air Corporation (SEE) : Free Stock Analysis Report
Roper Technologies, Inc. (ROP) : Free Stock Analysis Report
Cintas Corporation (CTAS) : Free Stock Analysis Report
Welbilt, Inc. (WBT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research