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Here's Why You Should Avoid Betting on Roper (ROP) Stock Now
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We have issued an updated research report on Roper Technologies, Inc. (ROP - Free Report) on Jan 3.
This machinery company currently carries a Zacks Rank #4 (Sell). Its market capitalization is approximately $27.6 billion.
Let’s delve deeper and discuss what led to the company’s poor investment appeal.
Share Price Performances, Poor Valuation & Earnings Estimate Revision: Market sentiments have been against Roper for quite some time now. Over the past month, the company’s stock price has lost 7% versus the industry’s decline of 7.5% and the S&P 500’s decrease of 6.9%.
The company’s stock appears overvalued compared with the industry. On a Price/Earnings (P/E) basis, the stock is currently trading at 23.6x, higher compared with the industry’s 16.4x.
In addition, the company’s earnings estimates have been lowered in the past three months. Currently, the Zacks Consensus Estimate is pegged at $12.20 for 2019, reflecting decline of 0.1% from the 60-day ago tally. Estimates for 2018 (results not yet released) have remained unchanged at $11.72.
Furthermore, the company’s Earnings ESP is currently -0.13% for 2018 and -0.81% for 2019. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Higher Costs and Expenses: Over time, Roper has been dealing with adverse impacts of high cost of sales and operating expenses. In the last five years (2013-2017), the company’s cost of sales increased 5.2% (CAGR) and operating expenses grew 9.7% (CAGR).
Further, the company’s cost of sales and operating expenses increased 9.9% and 11.2%, respectively in the first nine months of 2018. Further escalation in costs and operating expenses, if not controlled, can severely impact margins and profitability.
Long-Term Debt: Roper’s long-term debts in the last five years (2013-2017) increased 12.2% (CAGR). At the end of the first nine months of 2018, the company’s long-term debt stood a $4.4 billion, reflecting growth of 1.4% from the 2017 level. In August 2018, it issued notes worth $1.5 billion.
We believe that high debt levels, if unchecked, can prove detrimental to the company’s margins and profitability in the quarters ahead.
High Taxes & Other Headwinds: Roper expects tax rate to be approximately 23% in the fourth quarter of 2018. This rate is higher than 21.5% recorded in the third quarter. In addition to this headwind, the company is exposed to integration risks arising from frequent acquisitions. Additionally, sometimes regular activities of the management might get disrupted due to high number of buyouts.
Stocks to Consider
Some better-ranked stocks in the industry are DXP Enterprises, Inc. (DXPE - Free Report) , Luxfer Holdings PLC (LXFR - Free Report) and Colfax Corporation . While both DXP Enterprises and Luxfer Holdings sport a Zacks Rank #1 (Strong Buy), Colfax currently carries a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for the three companies have improved for 2019. Further, positive earnings surprise for the last quarter was 17.95% for DXP Enterprises, 60.61% for Luxfer and 3.85% for Colfax.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Here's Why You Should Avoid Betting on Roper (ROP) Stock Now
We have issued an updated research report on Roper Technologies, Inc. (ROP - Free Report) on Jan 3.
This machinery company currently carries a Zacks Rank #4 (Sell). Its market capitalization is approximately $27.6 billion.
Let’s delve deeper and discuss what led to the company’s poor investment appeal.
Share Price Performances, Poor Valuation & Earnings Estimate Revision: Market sentiments have been against Roper for quite some time now. Over the past month, the company’s stock price has lost 7% versus the industry’s decline of 7.5% and the S&P 500’s decrease of 6.9%.
The company’s stock appears overvalued compared with the industry. On a Price/Earnings (P/E) basis, the stock is currently trading at 23.6x, higher compared with the industry’s 16.4x.
In addition, the company’s earnings estimates have been lowered in the past three months. Currently, the Zacks Consensus Estimate is pegged at $12.20 for 2019, reflecting decline of 0.1% from the 60-day ago tally. Estimates for 2018 (results not yet released) have remained unchanged at $11.72.
Roper Technologies, Inc. Price and Consensus
Roper Technologies, Inc. Price and Consensus | Roper Technologies, Inc. Quote
Furthermore, the company’s Earnings ESP is currently -0.13% for 2018 and -0.81% for 2019. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Higher Costs and Expenses: Over time, Roper has been dealing with adverse impacts of high cost of sales and operating expenses. In the last five years (2013-2017), the company’s cost of sales increased 5.2% (CAGR) and operating expenses grew 9.7% (CAGR).
Further, the company’s cost of sales and operating expenses increased 9.9% and 11.2%, respectively in the first nine months of 2018. Further escalation in costs and operating expenses, if not controlled, can severely impact margins and profitability.
Long-Term Debt: Roper’s long-term debts in the last five years (2013-2017) increased 12.2% (CAGR). At the end of the first nine months of 2018, the company’s long-term debt stood a $4.4 billion, reflecting growth of 1.4% from the 2017 level. In August 2018, it issued notes worth $1.5 billion.
We believe that high debt levels, if unchecked, can prove detrimental to the company’s margins and profitability in the quarters ahead.
High Taxes & Other Headwinds: Roper expects tax rate to be approximately 23% in the fourth quarter of 2018. This rate is higher than 21.5% recorded in the third quarter. In addition to this headwind, the company is exposed to integration risks arising from frequent acquisitions. Additionally, sometimes regular activities of the management might get disrupted due to high number of buyouts.
Stocks to Consider
Some better-ranked stocks in the industry are DXP Enterprises, Inc. (DXPE - Free Report) , Luxfer Holdings PLC (LXFR - Free Report) and Colfax Corporation . While both DXP Enterprises and Luxfer Holdings sport a Zacks Rank #1 (Strong Buy), Colfax currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for the three companies have improved for 2019. Further, positive earnings surprise for the last quarter was 17.95% for DXP Enterprises, 60.61% for Luxfer and 3.85% for Colfax.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>