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Roper (ROP) Q3 Earnings Surpass Estimates, Guidance Raised

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Roper Technologies, Inc. (ROP - Free Report) reported third-quarter 2017 adjusted earnings per share of $2.36, beating the Zacks Consensus Estimate of $2.30.

Revenues of $1.16 billion were up 23% year over year while adjusted revenues grew 24% to $1.17 billion.

Organic revenues were up 5% while orders increased 26.1% year over year to $1.171 billion at the end of the quarter.

Roper Technologies, Inc. Price, Consensus and EPS Surprise

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

Roper maintained that its asset light business model and acquisitions continued to boost its performance, especially software and network businesses like ConstructConnect and Deltek.

Segment Revenue Details

Revenues from Medical & Scientific Imaging increased 1.7% year over year to $343.6 million.

Revenues from RF Technology went up 58.3% from the year-ago quarter to $480.6 million.

Revenues from Industrial Technology increased 12.4% year over year to $200.4 million.

Also, revenues from Energy Systems & Controls grew nearly 8% year over year to $135.3 million.

Margins

Adjusted gross margin increased 170 basis points (bps) to 63%. Adjusted EBITDA was $407 million, up 24% year over year. Adjusted EBITDA margin expanded 20 bps to 34.8%.

Balance Sheet and Cash Flow

Roper ended the quarter with approximately $605.6 million in cash and equivalents, compared with $757.2 million as on Dec 31, 2016. Long-term debt was $4.933 billion, compared with $5.809 billion as of Dec 31, 2016.

For the first nine months of the year, the company’s adjusted operating cash flow was $865.7 million, up 24.9% year over year.

Guidance

For fourth-quarter 2017, Roper Technologies expects adjusted earnings per share in the range of $2.56­–$2.62.

For 2017, the company expects adjusted earnings per share in the range of $9.27–$9.33, compared with $9.12–$9.30 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 and niche-oriented products, which help it to gain market share.

We remain positive about Roper Technologies’ strategic expansion strategy primarily through accretive acquisitions. Successful integration of the acquisitions has contributed meaningfully to the top line and margins. Its acquisition of ConstructConnect and Deltekwill continue to boost its performance especially in the software and network businesses.

We note that Roper has outperformed the industry year to date. The stock has increased 40.7%, compared with the industry’s gain of 26.1%.

Sluggish global macroeconomic conditions also remain headwinds. 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.

Currently, Roper carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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