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Why Is Roper Technologies (ROP) Down 1.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Roper Technologies (ROP - Free Report) . Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Roper Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Roper Q2 Earnings & Revenues Top Estimates, Decline Y/Y
Roper has delivered an earnings and revenues surprise of 10.1% and 3.8%, respectively, in second-quarter 2020.
Adjusted earnings were $2.94 per share, surpassing the Zacks Consensus Estimate of $2.67. However, the bottom line decreased 4.2% from the year-ago quarter number of $3.07 per share.
Inside the Headlines
Roper’s net revenues were $1,305 million, down 1.9% year over year. Notably, adjusted revenues totaled $1,306 million, down 2% year over year. The decline was primarily attributable to a decrease of 3% in organic revenues, partially offset by 1% gain from acquired assets. The top line beat the Zacks Consensus Estimate of $1,257 million.
The company reports revenues under four segments. A brief discussion of the quarterly results is provided below.
Application Software’s revenues totaled $398.4 million, representing 30.5% of the quarter’s revenues. On a year-over-year basis, the segment’s revenues grew 2%.
Network Software & Systems generated revenues of $422 million, accounting for 32.3% of second-quarter revenues. Sales grew 15% year over year.
Measurement & Analytical Solutions generated revenues of $363.9 million, accounting for 27.9% of the quarter’s revenues. Sales declined 10.9% year over year.
Process Technologies generated revenues of $120.7 million, accounting for 9.3% of the quarter’s revenues. Sales were down 26.6% year over year.
Margin Details
In the second quarter, Roper’s cost of sales decreased 4% year over year to $461.3 million. Cost of sales was 35.3% of the quarter’s revenues compared with 36.1% a year ago. Adjusted gross profit decreased 1% to $845 million, while adjusted gross margin was 64.7%, reflecting an expansion of 70 basis points (bps).
Selling, general and administrative expenses increased 5.9% to $510.1 million. It represented 39.1% of total revenues compared with 36.2% in the year-ago quarter. Operating profit declined 7.5% to $383.9 million, with margin of 29.4%, down 180 bps year over year.
Balance Sheet & Cash Flow
Exiting the second quarter, Roper had cash and cash equivalents of $1,870.8 million compared with $709.7 million recorded on Dec 31, 2019. Long-term debt (net of current portion) was $5,263.8 million compared with $4,673.1 million at the end of 2019.
In the first six months of 2020, the company generated net cash of $813 million from operating activities, up 37.5% year over year.
Capital expenditure during the second quarter totaled $8 million, lower than the year-ago figure of $12 million. Adjusted free cash flow in the quarter was up 10% to $315 million on a year-over-year basis.
Outlook
For 2020, adjusted earnings per share are anticipated to be $11.90-$12.40 compared with $11.60-$12.60 mentioned earlier.
For the third quarter of 2020, earnings are projected to be $2.90-$3.00 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Roper Technologies has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Roper Technologies has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Roper Technologies (ROP) Down 1.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Roper Technologies (ROP - Free Report) . Shares have lost about 1.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Roper Technologies due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Roper Q2 Earnings & Revenues Top Estimates, Decline Y/Y
Roper has delivered an earnings and revenues surprise of 10.1% and 3.8%, respectively, in second-quarter 2020.
Adjusted earnings were $2.94 per share, surpassing the Zacks Consensus Estimate of $2.67. However, the bottom line decreased 4.2% from the year-ago quarter number of $3.07 per share.
Inside the Headlines
Roper’s net revenues were $1,305 million, down 1.9% year over year. Notably, adjusted revenues totaled $1,306 million, down 2% year over year. The decline was primarily attributable to a decrease of 3% in organic revenues, partially offset by 1% gain from acquired assets. The top line beat the Zacks Consensus Estimate of $1,257 million.
The company reports revenues under four segments. A brief discussion of the quarterly results is provided below.
Application Software’s revenues totaled $398.4 million, representing 30.5% of the quarter’s revenues. On a year-over-year basis, the segment’s revenues grew 2%.
Network Software & Systems generated revenues of $422 million, accounting for 32.3% of second-quarter revenues. Sales grew 15% year over year.
Measurement & Analytical Solutions generated revenues of $363.9 million, accounting for 27.9% of the quarter’s revenues. Sales declined 10.9% year over year.
Process Technologies generated revenues of $120.7 million, accounting for 9.3% of the quarter’s revenues. Sales were down 26.6% year over year.
Margin Details
In the second quarter, Roper’s cost of sales decreased 4% year over year to $461.3 million. Cost of sales was 35.3% of the quarter’s revenues compared with 36.1% a year ago. Adjusted gross profit decreased 1% to $845 million, while adjusted gross margin was 64.7%, reflecting an expansion of 70 basis points (bps).
Selling, general and administrative expenses increased 5.9% to $510.1 million. It represented 39.1% of total revenues compared with 36.2% in the year-ago quarter. Operating profit declined 7.5% to $383.9 million, with margin of 29.4%, down 180 bps year over year.
Balance Sheet & Cash Flow
Exiting the second quarter, Roper had cash and cash equivalents of $1,870.8 million compared with $709.7 million recorded on Dec 31, 2019. Long-term debt (net of current portion) was $5,263.8 million compared with $4,673.1 million at the end of 2019.
In the first six months of 2020, the company generated net cash of $813 million from operating activities, up 37.5% year over year.
Capital expenditure during the second quarter totaled $8 million, lower than the year-ago figure of $12 million. Adjusted free cash flow in the quarter was up 10% to $315 million on a year-over-year basis.
Outlook
For 2020, adjusted earnings per share are anticipated to be $11.90-$12.40 compared with $11.60-$12.60 mentioned earlier.
For the third quarter of 2020, earnings are projected to be $2.90-$3.00 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Roper Technologies has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Roper Technologies has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.