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Why Is Roper Technologies (ROP) Down 10.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for Roper Technologies (ROP - Free Report) . Shares have lost about 10.3% 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 the most recent earnings report in order to get a better handle on the important drivers.
Roper's Q1 Earnings and Revenues Surpass Estimates
Roper Technologies, Inc. reported better-than-expected first-quarter 2022 results, with earnings and sales surpassing estimates by 2.2% and 3%, respectively.
ROP’s adjusted earnings in the first quarter were $3.77 per share, surpassing the Zacks Consensus Estimate of $3.69. On a year-over-year basis, earnings expanded 4.7% from $3.60 on the back of a healthy sales generation, partially offset by higher costs and expenses.
Revenue Details
In the reported quarter, Roper’s net revenues amounted to $1,527 million, up 11% year over year. Adjusted revenues also increased 11% year over year to $1,527 million. Organic sales in the quarter increased 11% and acquisitions/divestitures had a positive contribution of 1%. However, movement in foreign currency translation had an adverse impact of 1%.
Roper’s top line beat the Zacks Consensus Estimate of $1,482 million.
ROP reports revenues under four segments. A brief discussion on the quarterly results is provided below:
Application Software’s revenues totaled $631.5 million, representing 41.4% of the quarter’s top line. On a year-over-year basis, the segment’s revenues expanded 9.5%. Organic sales in the quarter increased 9%.
Network Software & Systems generated revenues of $368.7 million, accounting for 24.1% of first-quarter revenues. The top line grew 17.3% year over year. Organic sales in the quarter increased 16%.
Measurement & Analytical Solutions generated revenues of $392.4 million, accounting for 25.7% of the quarter’s revenues. Sales increased 6.2% year over year. Organic sales in the quarter increased 7%.
Process Technologies generated revenues of $134 million, accounting for 8.8% of the quarter’s revenues. Sales were up 15.8% year over year. Organic sales in the quarter grew 18%.
Margin Profile
In the reported quarter, Roper’s cost of sales increased 12.8% year over year to $496.5 million. Cost of sales was 32.5% of the quarter’s net sales. Gross profit in the quarter grew 10.1% to $1,030.1 million, while gross margin decreased 54 basis points (bps) year over year to 67.5%.
Selling, general and administrative expenses increased 8.5% to $609.0 million. The same represented 39.9% of net sales in the reported quarter. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $577 million, reflecting year-over-year growth of 8%. Margin decreased 90 bps to 37.8%. Interest expenses fell 13.2% year over year to $52.6 million.
Balance Sheet & Cash Flow
Exiting first-quarter 2022, Roper had cash and cash equivalents of $3,237.5 million, up from $351.5 million recorded in the last reported quarter. Long-term debt decreased 6.6% sequentially to $6,654.8 million.
In the first three months of 2022, ROP’s repayment under the revolving line of credit was $470.0 million.
Roper generated net cash of $475.3 million from operating activities in the first three months of 2022, reflecting a decline of 15.1% from the year-ago level. Capital expenditure totaled $7.1 million, same as the year-ago figure.
ROP rewarded its shareholders with a dividend payout of $65.3 million in the first three months of 2022. The amount represents growth from $58.8 million distributed in the first quarter of 2021.
Outlook
For 2022, Roper predicts earnings from continuing operations of $15.50-$15.75 per share, higher than $15.25-$15.55 projected earlier. For the full year, organic sales are expected to increase 7-9% year over year, higher than the previous estimation of 6-8%.
For the second quarter of 2022, ROP’s earnings from continuing operations are expected to be $3.80-$3.84.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Roper Technologies has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise 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 10.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Roper Technologies (ROP - Free Report) . Shares have lost about 10.3% 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 the most recent earnings report in order to get a better handle on the important drivers.
Roper's Q1 Earnings and Revenues Surpass Estimates
Roper Technologies, Inc. reported better-than-expected first-quarter 2022 results, with earnings and sales surpassing estimates by 2.2% and 3%, respectively.
ROP’s adjusted earnings in the first quarter were $3.77 per share, surpassing the Zacks Consensus Estimate of $3.69. On a year-over-year basis, earnings expanded 4.7% from $3.60 on the back of a healthy sales generation, partially offset by higher costs and expenses.
Revenue Details
In the reported quarter, Roper’s net revenues amounted to $1,527 million, up 11% year over year. Adjusted revenues also increased 11% year over year to $1,527 million. Organic sales in the quarter increased 11% and acquisitions/divestitures had a positive contribution of 1%. However, movement in foreign currency translation had an adverse impact of 1%.
Roper’s top line beat the Zacks Consensus Estimate of $1,482 million.
ROP reports revenues under four segments. A brief discussion on the quarterly results is provided below:
Application Software’s revenues totaled $631.5 million, representing 41.4% of the quarter’s top line. On a year-over-year basis, the segment’s revenues expanded 9.5%. Organic sales in the quarter increased 9%.
Network Software & Systems generated revenues of $368.7 million, accounting for 24.1% of first-quarter revenues. The top line grew 17.3% year over year. Organic sales in the quarter increased 16%.
Measurement & Analytical Solutions generated revenues of $392.4 million, accounting for 25.7% of the quarter’s revenues. Sales increased 6.2% year over year. Organic sales in the quarter increased 7%.
Process Technologies generated revenues of $134 million, accounting for 8.8% of the quarter’s revenues. Sales were up 15.8% year over year. Organic sales in the quarter grew 18%.
Margin Profile
In the reported quarter, Roper’s cost of sales increased 12.8% year over year to $496.5 million. Cost of sales was 32.5% of the quarter’s net sales. Gross profit in the quarter grew 10.1% to $1,030.1 million, while gross margin decreased 54 basis points (bps) year over year to 67.5%.
Selling, general and administrative expenses increased 8.5% to $609.0 million. The same represented 39.9% of net sales in the reported quarter. Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $577 million, reflecting year-over-year growth of 8%. Margin decreased 90 bps to 37.8%. Interest expenses fell 13.2% year over year to $52.6 million.
Balance Sheet & Cash Flow
Exiting first-quarter 2022, Roper had cash and cash equivalents of $3,237.5 million, up from $351.5 million recorded in the last reported quarter. Long-term debt decreased 6.6% sequentially to $6,654.8 million.
In the first three months of 2022, ROP’s repayment under the revolving line of credit was $470.0 million.
Roper generated net cash of $475.3 million from operating activities in the first three months of 2022, reflecting a decline of 15.1% from the year-ago level. Capital expenditure totaled $7.1 million, same as the year-ago figure.
ROP rewarded its shareholders with a dividend payout of $65.3 million in the first three months of 2022. The amount represents growth from $58.8 million distributed in the first quarter of 2021.
Outlook
For 2022, Roper predicts earnings from continuing operations of $15.50-$15.75 per share, higher than $15.25-$15.55 projected earlier. For the full year, organic sales are expected to increase 7-9% year over year, higher than the previous estimation of 6-8%.
For the second quarter of 2022, ROP’s earnings from continuing operations are expected to be $3.80-$3.84.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Roper Technologies has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Roper Technologies has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.