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Roper (ROP) Beats on Q2 Earnings, Improves 2022 Outlook

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Roper Technologies’ (ROP - Free Report) second-quarter 2022 adjusted earnings (excluding $1.43 from non-recurring items) of $3.95 per share surpassed the Zacks Consensus Estimate of $3.82. On a year-over-year basis, earnings expanded 5.1% despite high costs.

Roper’s net revenues of $1,310.8 million missed the Zacks Consensus Estimate of $1,537 million. The top line decreased 17.4% year over year. Organic sales in the quarter increased 11%, owing to software recurring revenue growth of 12%. Acquisitions/divestitures boosted sales by 1%. However, movement in foreign currency translation had an adverse impact of 1%.

Segmental Performance

Roper has divested its Process Technologies segment and industrial units of Measurement & Analytical Solutions segment. Beginning the second quarter of 2022, the company started reporting under three segments namely — Application Software, Network Software and Technology Enabled Products.

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


Application Software’s revenues totaled $627.5 million, representing 47.9% of the quarter’s top line. On a year-over-year basis, the segment’s revenues increased 6.7%. Organic sales in the quarter increased 7%.

Network Software & Systems generated revenues of $342.9 million, accounting for 26.2% of first-quarter revenues. Segmental revenues grew 15.1% year over year. Organic sales in the quarter increased 15%.

Technology Enabled Products generated revenues of $340.4 million, accounting for 26% of the quarter’s revenues. Sales were up 11.9% year over year. Organic sales in the quarter grew 13%.

Margin Profile

In the reported quarter, Roper’s cost of sales increased 13.9% year over year to $399.3 million. Cost of sales was 30.5% of the quarter’s net sales. Gross profit in the quarter grew 8.6% to $911.5 million, while gross margin decreased to 69.5% from 70.5% in the year-ago quarter.

Selling, general and administrative expenses increased 4.9% to $548.6 million. The same represented 41.8% of net sales in the reported quarter. Adjusted EBITDA was $515 million, reflecting year-over-year growth of 9.8%. Margin decreased 10 basis points to 39.4%. Interest expenses fell 23.7% year over year to $45 million.

Balance Sheet & Cash Flow

Exiting second-quarter 2022, Roper had cash and cash equivalents of $2,879.1 million compared with $351.5 million at the end of December 2021. Long-term debt (net of current portion) decreased to $6,657.1 million from $7,122.6 million at the end of the year-ago period. In the first six months of 2022, ROP’s repayment under the revolving line of credit was $470.0 million.

Roper generated net cash of $411.1 million from operating activities in the first six months of 2022, reflecting a decline of 58.3% from the year-ago level. Capital expenditure totaled $13.7 million, compared with $12.8 million in the year-ago quarter.

In the first half of 2022, ROP rewarded its shareholders with dividend payment of $130.7 million, up 10.9% year over year.

Improved Outlook

Roper has improved its full-year outlook owing to strong second-quarter performance and expectations of continued strength in its business. For 2022, ROP predicts adjusted earnings per share from continuing operations of $13.46-$13.62 (previous view: $13.20-$13.45). Organic growth from continuing operations is expected to be 8-9% in 2022.

For the third quarter, Roper anticipates earnings per share (continuing operations) of $3.42-$3.46.

Zacks Rank & Stocks to Consider

Roper carries a Zacks Rank #4 (Sell).

Some better-ranked stocks worth considering are as follows:

Griffon Corporation (GFF - Free Report) sports a Zacks Rank #1 (Strong Buy). The company has an impressive earnings surprise history having outperformed the Zacks Consensus Estimate in three of the preceding four quarters, while missing in one. The average beat was 97%.  You can see the complete list of today’s Zacks #1 Rank stocks.

Griffon has an estimated earnings growth rate of 117.6% for the current year. The stock gained 14.5% in a year’s time.

Greif (GEF - Free Report) carries a Zacks Rank #1. The company’s earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average beat being 22.9%.

Greif has an estimated earnings growth rate of 36.8% for the current year. Shares of the company have rallied 17.3% in a year.

Titan International (TWI - Free Report) flaunts a Zacks Rank #1. The company’s earnings have outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 56.4%.

Titan International has an estimated earnings growth rate of 164.7%. Shares of the company have surged more than 100% in a year.