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Roper (ROP) Beats Earnings Estimates in Q1, Misses Revenues

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Roper Technologies, Inc. (ROP - Free Report) reported first-quarter 2017 adjusted earnings per share of $2.11, beating the Zacks Consensus Estimate of $2.00. However, despite a 20.4% jump year over year, revenues of $1.086 billion missed the consensus mark of $1.094 billion.

Adjusted revenues grew 22% to $1.11 billion. Organic revenues were up 5% while orders increased 20.2% year over year to $1.114 billion in the quarter.

Roper maintained that acquisitions have helped its performance, especially the software and network businesses like ConstructConnect and Deltek.

Segment Revenue Details

Revenues from Medical & Scientific Imaging increased 4.8% year over year to $348.2 million.

Revenues from RF Technology went up 53.3% from the year-ago quarter to $429.6 million.

Revenues from Industrial Technology increased 7.1% year over year to $183.4 million.

Also, revenues from Energy Systems & Controls grew nearly 5.3% year over year to $125.1 million.

Roper Technologies, Inc. Price, Consensus and EPS Surprise

Roper Technologies, Inc. Price, Consensus and EPS Surprise | Roper Technologies, Inc. Quote

Margins

Adjusted gross margin increased 10 basis points (bps) to 62.2%. Adjusted EBITDA was $362 million, up 18% year over year.

Balance Sheet and Cash Flow

Roper Technologies ended the quarter with approximately $730.7 million in cash and equivalents, compared with $757.2 million as on Dec 31, 2016. Long-term debt was $5.440 billion, compared with $5.809 billion as of Dec 31, 2016.

In the first quarter, the company’s adjusted operating cash flow was $378 million while adjusted free cash flow was $360 million.

Guidance

For the second quarter of 2017, Roper Technologies expects adjusted earnings per share in a range of $2.16­–$2.24.

For 2017, the company expects adjusted earnings per share in a range of $8.98–$9.28, compared with $8.82–$9.22 per share.

Our Take

Roper’s unique asset light business model helps it not only to remain less dependent on large-scale production equipment but also to generate strong cash flow quickly.

Furthermore, Roper holds a dominant position in most of the markets where it operates. The company has an optimum mix of highly engineered, niche-oriented products, which help it to gain market share. The acquisitions of Deltek and ConstructConnect and winning New York City’s MTA project are significant positives. The company's strong dividend policy is also an added positive.

However, the company’s business is affected by weakness in the oil and gas sector. Sluggish global macroeconomic conditions also remain concerns.Stiff competition from the likes of Applied Industrial Technologies, Inc. (AIT - Free Report) , Barnes Group Inc. (B - Free Report) and Chart Industries Inc. (GTLS - Free Report) is an added concern.

We note that Roper underperformed the Zacks categorized Machinery-Gen Industrial industry in the last one year. The company’s shares have increased 23.59%, compared with the industry’s gain of 29.94% during the period.

Currently, Roper has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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