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Roper Technologies Up 33% YTD: What's Driving the Stock?
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Shares of Roper Technologies, Inc. (ROP - Free Report) have rallied around 33% so far this year. Also, the company has significantly outperformed its industry’s rise of 16.1% over the same time frame.
The Zacks Rank #2 (Buy) stock, which has a market cap of roughly $37 billion, has impressed investors with its recent earnings streak. It surpassed estimates all through in the four trailing quarters.
We believe that the company has several growth drivers in place and enjoys a robust foothold in its served markets, which should help it maintain growth momentum in the quarters ahead.
Growth Drivers
Roper has been strengthening its product portfolio and gaining access to new customers and regions through acquisitions of assets. Notably, the company used $539.2 million (net of cash acquired) for acquisitions in the first half of 2019. Also, buyouts increased sales by 2% in the second quarter. In August 2019, the company completed the acquisition of Exton, PA-based iPipeline. The company expects the buyout to generate revenues of $200 million and free cash flow (after-tax) of $70 million in 2020. Also, cash accretion is predicted immediately from this acquisition, together with high-single digit organic revenue growth. In addition, the company’s buyout of Foundry (completed in April 2019), a specialist in providing software technologies, will help Roper generate revenues of $75 million in the first year.
Also, the company is witnessing robust demand environment in its network, software and product businesses. In addition, strength in DAT, iTrade, MHA and SoftWriters businesses is likely to drive its revenues in the upcoming quarters. Further, strong demand for NDI business' electromagnetic and optical measurement systems coupled with strength in Verathon business will boost Roper’s top-line performance. For 2019, the company anticipates overall revenues to increase 4% year over year, on an organic basis.
Estimate Revisions
The Zacks Consensus Estimate for 2019 earnings for Roper has climbed nearly 0.9% over the past 60 days from $12.89 to $13.00. For the year, six estimates have been being revised upward in the past couple of months against one downward revision. Also, over the same time frame, the consensus estimate for 2020 has been raised 1.6% to $13.31 with seven estimates trending upward versus none downward.
Roper reported adjusted earnings per share of $3.07 in second-quarter 2019, marking a 6.2% year-over-year improvement. Moreover, the figure beat the Zacks Consensus Estimate by 0.99%. This earnings improvement is primarily attributable to a solid revenue growth. The company expects stronger sales, unique niche market strategy and healthy balance sheet to drive its profitability in 2019. It predicts adjusted earnings per share of $12.94-$13.06 for 2019, higher than $12.70-$13.00 predicted earlier.
DXP Enterprises pulled off average positive surprise of 18.06% in the last four quarters.
Graham’s earnings surprise in the last reported quarter was a positive 100.00%.
Metso’s earnings surprise in the last reported quarter was a positive 21.43%.
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Roper Technologies Up 33% YTD: What's Driving the Stock?
Shares of Roper Technologies, Inc. (ROP - Free Report) have rallied around 33% so far this year. Also, the company has significantly outperformed its industry’s rise of 16.1% over the same time frame.
The Zacks Rank #2 (Buy) stock, which has a market cap of roughly $37 billion, has impressed investors with its recent earnings streak. It surpassed estimates all through in the four trailing quarters.
We believe that the company has several growth drivers in place and enjoys a robust foothold in its served markets, which should help it maintain growth momentum in the quarters ahead.
Growth Drivers
Roper has been strengthening its product portfolio and gaining access to new customers and regions through acquisitions of assets. Notably, the company used $539.2 million (net of cash acquired) for acquisitions in the first half of 2019. Also, buyouts increased sales by 2% in the second quarter. In August 2019, the company completed the acquisition of Exton, PA-based iPipeline. The company expects the buyout to generate revenues of $200 million and free cash flow (after-tax) of $70 million in 2020. Also, cash accretion is predicted immediately from this acquisition, together with high-single digit organic revenue growth. In addition, the company’s buyout of Foundry (completed in April 2019), a specialist in providing software technologies, will help Roper generate revenues of $75 million in the first year.
Also, the company is witnessing robust demand environment in its network, software and product businesses. In addition, strength in DAT, iTrade, MHA and SoftWriters businesses is likely to drive its revenues in the upcoming quarters. Further, strong demand for NDI business' electromagnetic and optical measurement systems coupled with strength in Verathon business will boost Roper’s top-line performance. For 2019, the company anticipates overall revenues to increase 4% year over year, on an organic basis.
Estimate Revisions
The Zacks Consensus Estimate for 2019 earnings for Roper has climbed nearly 0.9% over the past 60 days from $12.89 to $13.00. For the year, six estimates have been being revised upward in the past couple of months against one downward revision. Also, over the same time frame, the consensus estimate for 2020 has been raised 1.6% to $13.31 with seven estimates trending upward versus none downward.
Roper Technologies, Inc. Price and Consensus
Roper Technologies, Inc. price-consensus-chart | Roper Technologies, Inc. Quote
Upbeat Q2 Performance
Roper reported adjusted earnings per share of $3.07 in second-quarter 2019, marking a 6.2% year-over-year improvement. Moreover, the figure beat the Zacks Consensus Estimate by 0.99%. This earnings improvement is primarily attributable to a solid revenue growth. The company expects stronger sales, unique niche market strategy and healthy balance sheet to drive its profitability in 2019. It predicts adjusted earnings per share of $12.94-$13.06 for 2019, higher than $12.70-$13.00 predicted earlier.
Other Key Picks
Some other top-ranked stocks from the same space are DXP Enterprises, Inc. (DXPE - Free Report) , Graham Corporation (GHM - Free Report) and Metso Corporation . All these companies carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DXP Enterprises pulled off average positive surprise of 18.06% in the last four quarters.
Graham’s earnings surprise in the last reported quarter was a positive 100.00%.
Metso’s earnings surprise in the last reported quarter was a positive 21.43%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>