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Roper Technologies (ROP) Beats on Q2 Earnings, Raises View

Roper Technologies, Inc. ROP reported second-quarter 2018 adjusted earnings of $2.89 per share, which beat the Zacks Consensus Estimate of $2.70 and improved 29% on a year-over-year basis.

Adjusted revenues of $1,293.7 million increased 13% year over year, topping the Zacks Consensus Estimate of $1,233 million. Organic revenues grew 9% while acquisitions/divestitures contributed 2% to top-line growth.

Roper enjoyed solid operational execution and broad-based growth in all its segments. In the reported quarter, the company completed the buyout of PowerPlan, a major provider of software and solution for asset-centric businesses.

Segmental Details

For the quarter, Medical & Scientific Imaging revenues increased 6.5% year over year to $373.7 million while RF Technology revenues grew 16.7% to $537.4 million.

Industrial Technology revenues jumped 20% year over year to $231.6 million. Moreover, revenues from Energy Systems & Controls grew 15.7% to $151 million.

Roper Technologies, Inc. Price, Consensus and EPS Surprise

 

Roper Technologies, Inc. Price, Consensus and EPS Surprise | Roper Technologies, Inc. Quote

In the quarter, adjusted gross margin expanded 40 basis points (bps) to 63.1% on a year- over-year basis.

Segment wise, RF Technology, Energy Systems & Controls and Industrial Technology gross margins expanded 340 bps, 120 bps and 40 bps, respectively. However, Medical & Scientific Imaging gross margin contracted 130 bps.

Guidance

Buoyed by the robust performance, Roper raised 2018 guidance. The company expects adjusted earnings between $11.40 and $11.56, up from the previous range of $11.08 and $11.32.

For third-quarter 2018, Roper projects adjusted earnings between $2.89 and $2.95 per share.

Conclusion

Roper holds a dominant position in most of the markets where it operates. The company has an optimum mix of highly-engineered and niche-oriented products, which help it gain market share.

Also, the company's unique asset-light business model makes it less dependent on large-scale production equipment. We are also optimistic about its expansion strategy, primarily through accretive acquisitions.

However, over the past several quarters, rising cost of goods sold remained a major concern for the company, which may continue hurting its margins.

Zacks Rank & Stocks to Consider

Roper currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are Chart Industries, Inc. GTLS, Welbilt, Inc. WBT and Graco Inc. GGG. While Chart Industries sports a Zacks Rank #1 (Strong Buy), Welbilt and Graco carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chart Industries surpassed estimates in each of the trailing four quarters with an average beat of 29.36%.

Welbilt exceeded estimates thrice in the trailing four quarters with an average beat of 14.60%.

Graco surpassed estimates twice in the trailing four quarters with an average beat of 4.26%.

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