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Roper's (ROP) Q4 Earnings Surpass Estimates, Revenues Miss

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Roper Technologies, Inc. ROP delivered fourth-quarter 2019 positive earnings surprise of 1.5%.

Adjusted earnings were $3.39 per share, surpassing the Zacks Consensus Estimate of $3.34. Also, the bottom line increased 5.3% from the year-ago quarter number of $3.22 backed by solid revenue growth.

In 2019, the company’s adjusted earnings were $13.05 per share, increasing 10% from the year-ago figure of $11.81.

Inside the Headlines

Roper’s net revenues were $1,394.8 million, up 1.3% year over year. Notably, adjusted revenues totaled $1,400 million, up 2% year over year. The rise was primarily driven by 1% organic growth and 1% gain from acquired assets. However, the top line missed the Zacks Consensus Estimate of $1,419 million.

Roper Technologies, Inc. Price, Consensus and EPS Surprise

Roper Technologies, Inc. Price, Consensus and EPS Surprise

Roper Technologies, Inc. price-consensus-eps-surprise-chart | Roper Technologies, Inc. Quote

The company reports revenues under four segments. A brief discussion of the quarterly results is provided below:

Application Software’s revenues totaled $410.8 million, representing 29.5% of the quarter’s revenues. On a year-over-year basis, the segment’s revenues grew 4.7%.

Network Software & Systems generated revenues of $425.8 million, accounting for roughly 30.5% of fourth-quarter revenues. Sales grew 19.8% year over year.

Measurement & Analytical Solutions generated revenues of $387.9 million, accounting for roughly 27.8% of the quarter’s top line. Sales declined 13.1% year over year.

Process Technologies generated revenues of $170.3 million, accounting for roughly 12.1% of the quarter’s revenues. Sales edged down 6.5% year over year.

Margin Details

In the October-December quarter, Roper’s cost of sales decreased 0.3% year over year to $501.9 million. Cost of sales was 35.9% of the quarter’s revenues compared with 36.6% a year ago. Adjusted gross profit increased 3% to $898 million, with margin of 64.1% reflecting expansion of 60 basis points (bps).

Selling, general and administrative expenses fell 2.8% to $494.5 million. It represented 35.3% of total revenues compared with 36.9% in the year-ago quarter. Operating profit improved 0.2% to $440.7 million with margin of 31.6%, down 40 bps year over year.

Balance Sheet & Cash Flow

Exiting the fourth quarter, Roper had cash and cash equivalents of $709.7 million compared with $364.4 million recorded on Dec 31, 2018. Long-term debt declined 5.4% to $4,673.1 million from the end of 2018.

In 2019, the company generated net cash of $1,461.8 million from operating activities, up 2.2% year over year.

Capital expenditure during the fourth quarter totaled $10 million, lower than the year-ago figure of $15 million. Adjusted free cash flow in the quarter was up 1% to $453 million.

Outlook

For 2020, adjusted earnings per share are anticipated to be $13.30-$13.60, with organic revenue growth of 6-7%.

For the first quarter of 2020, earnings are projected to be $2.94-$3.00 per share.

Zacks Rank & Stocks to Consider

Roper currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the Zacks Industrial Products sector are Barnes Group, Inc. B, Berry Global Group, Inc. BERY Cintas Corporation (CTAS - Free Report) . All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Barnes Group delivered positive earnings surprise of 4.21%, on average, in the trailing four quarters.

Berry Global delivered positive earnings surprise of 0.70%, on average, in the trailing four quarters.

Cintas pulled off positive earnings surprise of 8.50%, on average, in the trailing four quarters.

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