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Roper's iPipeline Buyout to Aid Top Line & Cash Generation

Zacks Equity Research

Roper Technologies, Inc. ROP, on Aug 22, announced that it completed the acquisition of Exton, PA-based iPipeline. The other party to the transaction was Thoma Bravo, LLC, and other equity holders. The buyout agreement was announced in the first week of August.

It is worth mentioning here that Roper’s share price has grown roughly 1.3% since the parties reached an agreement on Aug 5. The closing price was $348.62 per share on Aug 23.

iPipeline is a provider of cloud-based software solutions to customers in financial services and the life insurance industry. The company’s services are used by roughly 1,350 financial institutions and distributors as well as 150 insurance carriers and 0.5 million agents.

Details of Buyout

Roper noted that it funded the transaction, valued at $1.625 billion, through revolving credit facility, offerings of senior unsecured notes (including $500 million of 2.350% of notes due to mature in 2024 and $700 million of 2.950% of notes due to mature in 2029) and cash on hand.

iPipeline’s brands and name will remain the same and will run under the leadership of CEO Larry Berran.

Roper believes that iPipeline’s efficient management team, solid customer base and customer retention policies will be beneficial. The buyout will help generate revenues of $200 million and free cash flow (after-tax) of $70 million in 2020. Also, cash accretion is predicted immediately from this buyout along with high-single-digit organic revenue growth.

Strengthening Portfolio Through Buyouts

We believe that the above-mentioned transaction is consistent with Roper’s policy of acquiring businesses to gain access to new customers, regions and product lines. In April 2019, Roper acquired Foundry, a specialist in providing software technologies. The buyout is predicted to generate $75 million in revenues in the first year of the completion.

It is worth mentioning here that acquired assets boosted Roper’s revenues by 2% in the second quarter of 2019.

Zacks Rank, Estimates and Price Performance of Roper

The company, with approximately $36.3-billion market capitalization, currently carries a Zacks Rank #2 (Buy).

In the past 30 days, earnings estimates for Roper have been improved. The Zacks Consensus Estimate for its earnings is pegged at $13.00 for 2019 and $13.31 for 2020, suggesting growth of 0.2% and 0.1% from the respective 30-day-ago figures.

Roper Technologies, Inc. Price and Consensus


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 improved 0.2% against 2.9% decline recorded by the industry.

Other Stocks That Warrant a Look

Some other top-ranked stocks in the industry are Graham Corporation GHM, DXP Enterprises, Inc. DXPE and Dover Corporation DOV. All these stocks currently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 60 days, earnings estimates for these stocks improved for the current year. Further, earnings surprise for the last reported quarter was 100% for Graham, 4.29% for DXP Enterprises and 0.65% for Dover.

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