Back to top

Analyst Blog

Roper Industries Inc. (ROP - Snapshot Report) reported third-quarter 2013 non-GAAP earnings of $1.42 per share, missing the Zacks Consensus Estimate of $1.45 per share.

Quarter Details

Roper’s non-GAAP total revenue (excluding a fair value adjustment to acquire deferred revenues and adjustments related to the MHA acquisition) increased 15.5% year over year to $863.7 million in the quarter. Revenues beat the Zacks Consensus Estimate of $861.0 million.

On a GAAP basis, Roper reported revenues of $827.8 million, up 10.7% from the year-ago quarter. Acquisitions and divestitures accounted for 11.0% of the revenue growth in the quarter. Organic revenues increased 3.0% and the company reported a backlog of $1.04 billion.

Growth across most of its business segments also contributed to the year-over-year increase in revenues. Revenues from Medical & Scientific Imaging and RF Technology increased 37.6% and 7.7%, respectively. The strength in these segments more than offset the 2.0% decline in revenues from Energy Systems. Industrial Technology moved up 0.8% compared with the year-ago quarter.

Adjusted gross profit increased 18.0% year over year to $491.5 million. Gross margin in the reported quarter increased to 56.9% from 55.7% in the year-ago quarter, primarily driven by better mix and higher revenues.

Adjusted income from operations increased 4.1% year over year to $228.2 million. The upside in operating income was attributable to improved sales. Operating margin improved from 26.4% to 29.3% on a year-over-year basis. Adjusted net earnings increased 4.2% from the year-ago quarter to $142.1 million or $1.42 per share in the quarter.

Roper exited the quarter with $459.9 million in cash and cash equivalents and total debt of $2.60 billion (including the current portion) compared with $374.6 million in cash and cash equivalents and total debt of $2.76 billion (including the current portion) in the previous quarter. Roper reported free cash flow of $244.3 million at the end of the third quarter.

Guidance

The company expects fourth quarter revenues to increase 7% - 9% on a year-over-year basis. This includes organic growth of 3% - 4%. Fourth quarter adjusted earnings per share are expected to be $1.57 - $1.63.

Roper also expects adjusted earnings per share for the full year to be in the range of $5.57 - $5.63 compared to the company’s previous guidance of $5.72 - $5.86.

Recommendation

Roper reported mixed third quarter results. We believe that a strong backlog coupled with robust organic growth will drive earnings growth. Moreover, accretive acquisitions will expand the company’s product portfolio, providing a significant competitive edge over its peers.

However, macroeconomic concerns, integration issues due to acquisitions and competition from Danaher Corp. (DHR - Analyst Report), Dover Corp (DOV - Analyst Report) and Ingersoll-Rand Plc (IR - Analyst Report) are possible headwinds for the company.

Currently, Roper has a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SYNAPTICS I… SYNA 78.11 +8.14%
CENTURY ALU… CENX 19.88 +5.74%
GREEN PLAIN… GPRE 39.41 +5.12%
PILGRIM'S P… PPC 28.82 +3.08%
THE PANTRY… PTRY 18.41 +2.79%