It has been about a month since the last earnings report for Roper Technologies (ROP Quick QuoteROP - Free Report) . Shares have added about 0.9% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Roper Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Roper Q2 Earnings Beat, Application Software Sales Up Y/Y

Roper’s second-quarter 2024 adjusted earnings of $4.48 per share surpassed the Zacks Consensus Estimate of $4.46. On a year-over-year basis, earnings increased 9%.

Roper’s net revenues of $1,716.8 million missed the consensus estimate of $1,724 million. However, the top line increased 12% year over year. Organic revenues increased 4%, driven primarily by solid momentum in the company’s Application Software segment. Acquisitions boosted sales by 8%.

Segmental Performance

The company reports under three segments, namely Application Software, Network Software and Technology Enabled Products.

Application Software’s revenues totaled $931.8 million, representing 54.3% of the quarter’s top line. Our estimate for the quarter was $917.4 million. On a year-over-year basis, the segment’s revenues increased 21%. Organic revenues increased 5%. The growing adoption of SaaS solutions and continued GenAI innovation were key catalysts to the segment’s growth. Solid demand for SaaS solutions within the Deltek business in the private sector and strong customer retention in the Vertafore business also augmented the segment’s performance.

Network Software & Systems generated revenues of $364.2 million, accounting for 21.2% of second-quarter revenues. Our estimate for the quarter was $372.4 million. Segmental revenues grew 2% year over year. Organic revenues increased 2%. Strength in iPipeline and ConstructConnect businesses supported the segment’s performance.

The Technology Enabled Products segment generated revenues of $420.8 million, accounting for 24.5% of the quarter’s revenues. Our estimate for the quarter was $434 million. Sales were up 4% year over year. Organic revenues grew 5%. The strong performance of the Verathon and Neptune businesses drove the segment’s top-line performance.

Margin Profile

In the reported quarter, Roper’s cost of sales increased 12.8% year over year to $523.5 million. Gross profit increased 11.8% to about $1.19 billion while the gross margin decreased to 69.5% from 69.7% in the year-ago quarter.

Selling, general and administrative expenses increased 10.7% year over year to $699.1 million. Adjusted EBITDA was $695 million, reflecting year-over-year growth of 13%. The margin increased 20 basis points to 40.5%. Interest expenses (net) increased 94% year over year to $67.5 million.

Balance Sheet & Cash Flow

Exiting the second quarter, Roper had cash and cash equivalents of $251.5 million compared with $214.3 million at the end of December 2023. Long-term debt (net of current portion) was $6.9 billion compared with $5.8 million at the end of 2023.

Roper generated net cash of $915.6 million from operating activities in the first six months of 2024, reflecting an increase of 16.6% from the year-ago level. Capital expenditure totaled $15.9 million compared with $24.9 million in the year-ago period.

In the first six months of 2024, it rewarded its shareholders with a dividend payment of $160.6 million, up 10.9% year over year.

2024 Outlook

For 2024, Roper predicts adjusted earnings per share from continuing operations to be in the range of $18.10-$18.25 compared with $18.05-$18.25 stated earlier. Total revenues are expected to increase 12% as guided earlier. Organic revenues are anticipated to increase 6% in 2024 from the year-ago reported number.

For the third quarter, Roper anticipates adjusted earnings to be $4.50-$4.54 per share, higher than $4.42-$4.46 projected previously.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Roper Technologies has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Roper Technologies has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Roper Technologies is part of the Zacks Computers - IT Services industry. Over the past month, Infosys (INFY Quick QuoteINFY - Free Report) , a stock from the same industry, has gained 1.5%. The company reported its results for the quarter ended June 2024 more than a month ago.

Infosys reported revenues of $4.71 billion in the last reported quarter, representing a year-over-year change of +2.1%. EPS of $0.18 for the same period compares with $0.17 a year ago.

For the current quarter, Infosys is expected to post earnings of $0.19 per share, indicating a change of +5.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Infosys has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.