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Roper Technologies (ROP) Q3 Earnings, Revenues Top Estimates

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Roper Technologies, Inc. (ROP - Free Report) delivered positive earnings and revenue surprises of 5.3% and 1%, respectively, in third-quarter 2020.

Adjusted earnings were $3.17 per share, surpassing the Zacks Consensus Estimate of $3.01. However, the bottom line decreased 3.6% from the year-ago quarter number of $3.29 per share.

Top-Line Details

Roper’s net revenues were $1,366.1 million, up 0.9% year over year. Notably, adjusted revenues totaled $1,369 million, up 1%. The increase was primarily backed by 3% gain from acquired assets, partially offset by a decrease of 3% in organic revenues. The top line beat the Zacks Consensus Estimate of $1,352 million.

The company reports revenues under four segments. A brief discussion of the quarterly results is provided below.

Application Software’s revenues totaled $447.9 million, representing 32.8% of the quarter’s top line. On a year-over-year basis, the segment’s revenues grew 10.5%.

Network Software & Systems generated revenues of $430.2 million, accounting for 31.5% of third-quarter top line. Sales grew 10% year over year.

Measurement & Analytical Solutions generated revenues of $367.9 million, accounting for 26.9% of the quarter’s top line. Sales declined 7.6% year over year.

Process Technologies generated revenues of $120.1 million, accounting for 8.8% of the quarter’s top line. Sales were down 24.7% year over year.

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

Margin Details

In the third quarter, Roper’s cost of sales increased 1.9% year over year to $490.2 million. Cost of sales was 35.9% of the quarter’s revenues compared with 35.5% a year ago. Adjusted gross profit increased 0.2% to $879 million, while adjusted gross margin was 64.2%, reflecting a contraction of 40 basis points (bps).

Selling, general and administrative expenses increased 4.1% to $508.3 million. It represented 37.2% of total revenues compared with 36.1% in the year-ago quarter. Operating profit declined 3.8% to $413.9 million, with margin of 30.3%, down 150 bps.

Balance Sheet & Cash Flow

Exiting the third quarter, Roper had cash and cash equivalents of $302.1 million compared with $709.7 million recorded on Dec 31, 2019. Long-term debt (net of current portion) was $9,101.2 million compared with $4,673.1 million at the end of 2019.

In the first nine months of 2020, the company generated net cash of $950.9 million from operating activities, down 4.5% year over year.

Capital expenditure during the third quarter totaled $8 million, lower than the year-ago figure of $14 million. Adjusted free cash flow in the quarter was up 14.2% to $442 million on a year-over-year basis.

Outlook

For 2020, adjusted earnings per share are anticipated to be $12.55-$12.65 compared with $11.90-$12.40 estimated earlier.

For the fourth quarter of 2020, earnings are projected to be $3.39-$3.49 per share.

Zacks Rank & Other Stocks to Consider

The company currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks from the same space are Kaman Corporation , Dover Corporation (DOV - Free Report) and IDEX Corporation (IEX - Free Report) . While Kaman sports a Zacks Rank #1 (Strong Buy), Dover and IDEX carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kaman delivered a positive earnings surprise of 30.42%, on average, in the trailing four quarters.

Dover delivered a positive earnings surprise of 18.10%, on average, in the trailing four quarters.

IDEX delivered a positive earnings surprise of 3.66%, on average, in the trailing four quarters.

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