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Reasons Why You Should Hold Roper (ROP) in Your Portfolio Now
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Roper Technologies, Inc. (ROP - Free Report) has been benefiting from strength across each of its business segments. The company’s Application Software segment is witnessing solid momentum in its Deltek, Vertafore, Strata and Aderant businesses. Strength across its ConstructConnect business and excellent bookings in the iPipeline business have been supporting the Network Software segment’s growth.
Robust demand for its products and solutions across the Neptune and Verathon businesses augurs well for the Technology Enabled Products segment. For 2024, the company expects total revenues to increase 12% from the year-ago levels while organic revenues are estimated to rise 6%.
Roper believes in adding complementary businesses to its portfolio via acquisitions. The company’s acquisition of Procare Solutions (in February 2024) will expand its software offerings in the education sector. Also, ROP acquired Syntellis Performance Solutions (in August 2023), which strengthened its Strata Decision Technology business. Acquisitions boosted sales by 6% in the first quarter.
Management is committed to rewarding shareholders through dividend payouts. For instance, in the first quarter, it paid out dividends worth $80.5 million, an increase of 11.3% year over year. Also, in November 2023, the company hiked its dividend by 10%.
Image Source: Zacks Investment Research
In the past three months, the Zacks Rank #3 (Hold) company has gained 4.8% compared with the industry’s 1% growth.
However, rising costs and expenses have been a concern for ROP over time. In the first three months of 2024, its cost of sales increased 10.8% year over year while selling, general and administrative (SG&A) expenses rose 13.3%. Also, in 2023, its cost of sales and SG&A expenses climbed 15.5% and 15%, respectively, on a year-over-year basis. Higher costs related to the amortization of acquired assets are pushing up operating expenses.
High debt levels raise financial obligations and are likely to drain Roper’s profitability. ROP exited first-quarter 2024 with a long-term debt (net of the current portion) of $7.22 billion. Its current portion of long-term debt (net) totaled almost $500 million, higher than its cash equivalents of $198.4 million.
Check Point Software delivered a trailing four-quarter average earnings surprise of 3.6%. In the past 60 days, the Zacks Consensus Estimate for CHKP’s 2024 earnings has increased by a penny.
Vertiv Holdings delivered a trailing four-quarter average earnings surprise of 24.2%. In the past 60 days, the consensus estimate for VRT’s 2024 earnings has increased by a penny.
Bentley Systems delivered a trailing four-quarter average earnings surprise of 16.7%. In the past 60 days, the Zacks Consensus Estimate for BSY’s 2024 earnings has risen 5%.
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Reasons Why You Should Hold Roper (ROP) in Your Portfolio Now
Roper Technologies, Inc. (ROP - Free Report) has been benefiting from strength across each of its business segments. The company’s Application Software segment is witnessing solid momentum in its Deltek, Vertafore, Strata and Aderant businesses. Strength across its ConstructConnect business and excellent bookings in the iPipeline business have been supporting the Network Software segment’s growth.
Robust demand for its products and solutions across the Neptune and Verathon businesses augurs well for the Technology Enabled Products segment. For 2024, the company expects total revenues to increase 12% from the year-ago levels while organic revenues are estimated to rise 6%.
Roper believes in adding complementary businesses to its portfolio via acquisitions. The company’s acquisition of Procare Solutions (in February 2024) will expand its software offerings in the education sector. Also, ROP acquired Syntellis Performance Solutions (in August 2023), which strengthened its Strata Decision Technology business. Acquisitions boosted sales by 6% in the first quarter.
Management is committed to rewarding shareholders through dividend payouts. For instance, in the first quarter, it paid out dividends worth $80.5 million, an increase of 11.3% year over year. Also, in November 2023, the company hiked its dividend by 10%.
Image Source: Zacks Investment Research
In the past three months, the Zacks Rank #3 (Hold) company has gained 4.8% compared with the industry’s 1% growth.
However, rising costs and expenses have been a concern for ROP over time. In the first three months of 2024, its cost of sales increased 10.8% year over year while selling, general and administrative (SG&A) expenses rose 13.3%. Also, in 2023, its cost of sales and SG&A expenses climbed 15.5% and 15%, respectively, on a year-over-year basis. Higher costs related to the amortization of acquired assets are pushing up operating expenses.
High debt levels raise financial obligations and are likely to drain Roper’s profitability. ROP exited first-quarter 2024 with a long-term debt (net of the current portion) of $7.22 billion. Its current portion of long-term debt (net) totaled almost $500 million, higher than its cash equivalents of $198.4 million.
Key Picks
We have highlighted three better-ranked stocks, namely Check Point Software Technologies Ltd. (CHKP - Free Report) , Vertiv Holdings Co (VRT - Free Report) and Bentley Systems, Incorporated (BSY - Free Report) . Each of these companies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Check Point Software delivered a trailing four-quarter average earnings surprise of 3.6%. In the past 60 days, the Zacks Consensus Estimate for CHKP’s 2024 earnings has increased by a penny.
Vertiv Holdings delivered a trailing four-quarter average earnings surprise of 24.2%. In the past 60 days, the consensus estimate for VRT’s 2024 earnings has increased by a penny.
Bentley Systems delivered a trailing four-quarter average earnings surprise of 16.7%. In the past 60 days, the Zacks Consensus Estimate for BSY’s 2024 earnings has risen 5%.