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Roper (ROP) Completes PowerPlan Buyout, Strengthens Portfolio

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Roper Technologies (ROP - Free Report) recently announced the completion of the PowerPlan buyout. Notably, PowerPlan is a major provider of software and solution for asset-centric businesses. Its well-recognized software platform, which integrates detailed financial and operational data, helps in the optimization of customers’ financial performance and reduces compliance risk.

Roper used its revolving credit facility and cash on hand to fund this transaction.

Our Take

Roper enjoys a dominant position in most of the markets where it operates.  Additionally, the company has an optimum mix of highly engineered, niche-oriented products that helps it to gain market share. The company’s diversified revenue stream also enables it to counter the headwinds, associated with its operation in a cyclical business environment. In addition, Roper’s innovative product pipeline is likely to be a major growth catalyst over the long term.

The company’s unique asset-light business model too helps it to remain less dependent on large-scale production equipment. This, in turn, enables Roper to remain profitable even when sales decline during recession. The business model helps it to generate strong cash flow as well. We believe that enormous project wins and strong order trends will drive the company’s top line in the long run.

In the past six months, this Zacks Rank #2 (Buy) company has gained 8.2% against the industry’s decline of 4.1%.

Roper’s ardent eye for acquisitions is also likely to prove conducive to its business. Furthermore, the company is on a constant lookout for smaller, asset-light businesses with high profit margins, particularly companies providing medical solutions. In this regard, the Deltek and the ConstructConnect buyouts are worth mentioning as these have reinforced the company’s software and network businesses.

Other Stocks to Consider

Some other top-ranked stocks from the same space include Applied Industrial Technologies, Inc. (AIT - Free Report) , IDEX Corporation (IEX - Free Report) and Welbilt, Inc. (WBT - Free Report) . While Applied Industrial sports a Zacks Rank #1 (Strong Buy), IDEX and Welbilt carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Industrial surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 11.6%.

IDEX outpaced estimates in the preceding four quarters, with an average positive earnings surprise of 3.1%.

Welbilt exceeded estimates thrice in the trailing four quarters, with an average positive earnings surprise of 14.6%.

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