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Roper (ROP) Beats on Q3 Earnings, Raises 2023 EPS Guidance
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Roper Technologies’ (ROP - Free Report) third-quarter 2023 adjusted earnings of $4.32 per share surpassed the Zacks Consensus Estimate of adjusted earnings of $4.21 per share. On a year-over-year basis, earnings increased 17.7%.
Roper’s net revenues of $1,563.4 million beat the consensus estimate of $1,539 million. The top line increased 15.8% year over year. Organic sales in the quarter increased 6%, owing to strength across each of the three segments. Acquisitions boosted sales by 9%.
Segmental Performance
Roper has divested its Process Technologies segment and industrial units of the Measurement & Analytical Solutions segment. Beginning in the second quarter of 2022, the company started reporting under three segments namely, Application Software, Network Software and Technology Enabled Products.
Application Software’s revenues totaled $803.4 million, representing 51.4% of the quarter’s top line. Our estimate for the quarter was $772.4 million. On a year-over-year basis, the segment’s revenues increased 25%. Organic sales in the quarter increased 5%.
Network Software & Systems generated revenues of $364.1 million, accounting for 23.3% of third-quarter revenues. Our estimate for the quarter was $374.6 million. Segmental revenues grew 5% year over year. Organic sales in the quarter increased 5%.
The Technology Enabled Products segment generated revenues of $395.9 million, accounting for 25.3% of the quarter’s revenues. Our estimate for the quarter was $386.7 million. Sales were up 10% year over year. Organic sales in the quarter grew 10%.
Roper Technologies, Inc. Price, Consensus and EPS Surprise
In the reported quarter, Roper’s cost of sales increased 14.4% year over year to $467.1 million. Gross profit in the quarter grew 16.4% to $1,096.3 million while the gross margin increased to 70.1% from 69.7% in the year-ago quarter.
Selling, general and administrative expenses increased 18.5% to $650.2 million. Adjusted EBITDA was $652 million, reflecting year-over-year growth of 18%. The margin increased 60 basis points to 41.7%. Interest expenses increased 2.7% year over year to $42.4 million.
Balance Sheet & Cash Flow
Exiting third-quarter 2023, Roper had cash and cash equivalents of $299.5 million compared with $792.8 million at the end of December 2022. Long-term debt (net of current portion) was $6,379.0 million compared with $5,962.5 million at the end of the fourth quarter of 2022.
Roper generated net cash of $1,413.3 million from operating activities in the first nine months of 2023, reflecting a decline of 113.2% from the year-ago level. Capital expenditure totaled $37.8 million compared with $30 million in the year-ago quarter.
In the first nine months of 2023, ROP rewarded its shareholders with a dividend payment of $217.5 million, up 10.9% year over year.
2023 Outlook
ROP has increased its 2023 guidance. The company predicts adjusted earnings per share (EPS) from continuing operations of $16.62-$16.66 compared with $16.36-$16.50 stated earlier. The Zacks Consensus Estimate for the same is $16.45.
For the fourth quarter, Roper anticipates EPS to be $4.28-$4.32. The consensus estimate for the same is $4.21.
Zacks Rank & Other Stocks to Consider
Roper currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
AIT’s earnings estimates have increased 1.3% for fiscal 2024 (ending June 2024) in the past 60 days. Shares of Applied Industrial have risen 32.3% in the past year.
Axon Enterprise, Inc. (AXON - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of approximately 60.2%, on average.
In the past 60 days, estimates for Axon’s earnings have remained steady for 2023. The stock has soared 55.6% in the past year.
Caterpillar Inc. (CAT - Free Report) presently carries a Zacks Rank of 2. CAT’s earnings surprise in the last four quarters was 18.5%, on average.
In the past 60 days, estimates for Caterpillar’s 2023 earnings have increased 0.7%. The stock has gained 27.6% in the past year.
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Roper (ROP) Beats on Q3 Earnings, Raises 2023 EPS Guidance
Roper Technologies’ (ROP - Free Report) third-quarter 2023 adjusted earnings of $4.32 per share surpassed the Zacks Consensus Estimate of adjusted earnings of $4.21 per share. On a year-over-year basis, earnings increased 17.7%.
Roper’s net revenues of $1,563.4 million beat the consensus estimate of $1,539 million. The top line increased 15.8% year over year. Organic sales in the quarter increased 6%, owing to strength across each of the three segments. Acquisitions boosted sales by 9%.
Segmental Performance
Roper has divested its Process Technologies segment and industrial units of the Measurement & Analytical Solutions segment. Beginning in the second quarter of 2022, the company started reporting under three segments namely, Application Software, Network Software and Technology Enabled Products.
Application Software’s revenues totaled $803.4 million, representing 51.4% of the quarter’s top line. Our estimate for the quarter was $772.4 million. On a year-over-year basis, the segment’s revenues increased 25%. Organic sales in the quarter increased 5%.
Network Software & Systems generated revenues of $364.1 million, accounting for 23.3% of third-quarter revenues. Our estimate for the quarter was $374.6 million. Segmental revenues grew 5% year over year. Organic sales in the quarter increased 5%.
The Technology Enabled Products segment generated revenues of $395.9 million, accounting for 25.3% of the quarter’s revenues. Our estimate for the quarter was $386.7 million. Sales were up 10% year over year. Organic sales in the quarter grew 10%.
Roper Technologies, Inc. Price, Consensus and EPS Surprise
Roper Technologies, Inc. price-consensus-eps-surprise-chart | Roper Technologies, Inc. Quote
Margin Profile
In the reported quarter, Roper’s cost of sales increased 14.4% year over year to $467.1 million. Gross profit in the quarter grew 16.4% to $1,096.3 million while the gross margin increased to 70.1% from 69.7% in the year-ago quarter.
Selling, general and administrative expenses increased 18.5% to $650.2 million. Adjusted EBITDA was $652 million, reflecting year-over-year growth of 18%. The margin increased 60 basis points to 41.7%. Interest expenses increased 2.7% year over year to $42.4 million.
Balance Sheet & Cash Flow
Exiting third-quarter 2023, Roper had cash and cash equivalents of $299.5 million compared with $792.8 million at the end of December 2022. Long-term debt (net of current portion) was $6,379.0 million compared with $5,962.5 million at the end of the fourth quarter of 2022.
Roper generated net cash of $1,413.3 million from operating activities in the first nine months of 2023, reflecting a decline of 113.2% from the year-ago level. Capital expenditure totaled $37.8 million compared with $30 million in the year-ago quarter.
In the first nine months of 2023, ROP rewarded its shareholders with a dividend payment of $217.5 million, up 10.9% year over year.
2023 Outlook
ROP has increased its 2023 guidance. The company predicts adjusted earnings per share (EPS) from continuing operations of $16.62-$16.66 compared with $16.36-$16.50 stated earlier. The Zacks Consensus Estimate for the same is $16.45.
For the fourth quarter, Roper anticipates EPS to be $4.28-$4.32. The consensus estimate for the same is $4.21.
Zacks Rank & Other Stocks to Consider
Roper currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy) and a trailing four-quarter earnings surprise of 15%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
AIT’s earnings estimates have increased 1.3% for fiscal 2024 (ending June 2024) in the past 60 days. Shares of Applied Industrial have risen 32.3% in the past year.
Axon Enterprise, Inc. (AXON - Free Report) currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter earnings surprise of approximately 60.2%, on average.
In the past 60 days, estimates for Axon’s earnings have remained steady for 2023. The stock has soared 55.6% in the past year.
Caterpillar Inc. (CAT - Free Report) presently carries a Zacks Rank of 2. CAT’s earnings surprise in the last four quarters was 18.5%, on average.
In the past 60 days, estimates for Caterpillar’s 2023 earnings have increased 0.7%. The stock has gained 27.6% in the past year.