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Roper Technologies (ROP) Q3 Earnings Top,'18 EPS View Up
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Roper Technologies, Inc. (ROP - Free Report) reported better-than-expected results for third-quarter 2018.
Earnings/Revenues
Quarterly adjusted earnings came in at $3.09 per share, up nearly 31% year over year. The bottom-line figure also surpassed the Zacks Consensus Estimate of $2.94.
Adjusted revenues in the reported quarter came in at $1,321 million, up 12.8% year over year. The top line also outpaced the Zacks Consensus Estimate of $1,312 million. Revenues in the reported quarter improved 9% year over year on an organic basis, on the back of stellar sales generated by network, software and product businesses.
Segmental Break-Up
For the quarter, Medical & Scientific Imaging revenues increased 10.6% year over year to $380 million, while RF Technology revenues were up 16.6% to $560.4 million.
Industrial Technology revenues jumped 14.5% year over year to $229.5 million. Moreover, revenues from Energy Systems & Controls climbed 10% to $148.8 million.
Roper Technologies, Inc. Price, Consensus and EPS Surprise
Cost of sales in the third quarter was $478.7 million, up 10.4% year over year. Adjusted gross profit margin in the quarter was 63.8%, up 80 basis points (bps) year over year.
Selling, general and administrative expenses in the reported quarter were $462.5 million, up from $415.6 million recorded in the year-ago quarter. Adjusted operating profit margin in the Sep-end quarter was 31.8%, up 180 bps year over year.
Balance Sheet/Cash Flow
Exiting the third quarter, Roper had cash and cash equivalents of $363.4 million, down from $671.3 million recorded as of Dec 31, 2017. Long-term debt stood at $4,414.3 million, up from $4,354.6 million recorded in 2017-end.
In the first nine months of 2018, the company generated $966 million cash from operating activities, higher than $865.7 million secured in the year-ago quarter.
Free cash flow in the quarter under review was $404 million, up 34% year over year.
Guidance
Buoyed by the robust performance, Roper raised its 2018 adjusted earnings guidance from $11.40-$11.56 per share to $11.69-$11.73 per share.
For fourth-quarter 2018, Roper projects adjusted earnings between $3.10 and $3.14 per share.
Conclusion
Roper holds a dominant position in most of the markets where it operates. The company has an optimum mix of highly-engineered and niche-oriented products, which help it gain market share.
Also, the company's unique asset-light business model makes it less dependent on large-scale production equipment. We are also optimistic about its expansion strategy, primarily through accretive acquisitions.
However, over the past several quarters, rising cost of goods sold remained a major concern for this Zacks Rank #4 (Sell) company, which may continue hurting its margins going forward.
Altra Industrial Motion Corp. sports a Zacks Rank #1 (Strong Buy). The company pulled off an average positive earnings surprise of 4.01% in the past four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Donaldson Company, Inc. (DCI - Free Report) also sports a Zacks Rank of 1. The company delivered an average positive earnings surprise of 2.29% in the preceding four quarters.
Atkore International Group Inc. (ATKR - Free Report) carries a Zacks Rank #2 (Buy). The company generated an average positive earnings surprise of 24.46% in the trailing four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Roper Technologies (ROP) Q3 Earnings Top,'18 EPS View Up
Roper Technologies, Inc. (ROP - Free Report) reported better-than-expected results for third-quarter 2018.
Earnings/Revenues
Quarterly adjusted earnings came in at $3.09 per share, up nearly 31% year over year. The bottom-line figure also surpassed the Zacks Consensus Estimate of $2.94.
Adjusted revenues in the reported quarter came in at $1,321 million, up 12.8% year over year. The top line also outpaced the Zacks Consensus Estimate of $1,312 million. Revenues in the reported quarter improved 9% year over year on an organic basis, on the back of stellar sales generated by network, software and product businesses.
Segmental Break-Up
For the quarter, Medical & Scientific Imaging revenues increased 10.6% year over year to $380 million, while RF Technology revenues were up 16.6% to $560.4 million.
Industrial Technology revenues jumped 14.5% year over year to $229.5 million. Moreover, revenues from Energy Systems & Controls climbed 10% to $148.8 million.
Roper Technologies, Inc. Price, Consensus and EPS Surprise
Roper Technologies, Inc. Price, Consensus and EPS Surprise | Roper Technologies, Inc. Quote
Costs/Margins
Cost of sales in the third quarter was $478.7 million, up 10.4% year over year. Adjusted gross profit margin in the quarter was 63.8%, up 80 basis points (bps) year over year.
Selling, general and administrative expenses in the reported quarter were $462.5 million, up from $415.6 million recorded in the year-ago quarter. Adjusted operating profit margin in the Sep-end quarter was 31.8%, up 180 bps year over year.
Balance Sheet/Cash Flow
Exiting the third quarter, Roper had cash and cash equivalents of $363.4 million, down from $671.3 million recorded as of Dec 31, 2017. Long-term debt stood at $4,414.3 million, up from $4,354.6 million recorded in 2017-end.
In the first nine months of 2018, the company generated $966 million cash from operating activities, higher than $865.7 million secured in the year-ago quarter.
Free cash flow in the quarter under review was $404 million, up 34% year over year.
Guidance
Buoyed by the robust performance, Roper raised its 2018 adjusted earnings guidance from $11.40-$11.56 per share to $11.69-$11.73 per share.
For fourth-quarter 2018, Roper projects adjusted earnings between $3.10 and $3.14 per share.
Conclusion
Roper holds a dominant position in most of the markets where it operates. The company has an optimum mix of highly-engineered and niche-oriented products, which help it gain market share.
Also, the company's unique asset-light business model makes it less dependent on large-scale production equipment. We are also optimistic about its expansion strategy, primarily through accretive acquisitions.
However, over the past several quarters, rising cost of goods sold remained a major concern for this Zacks Rank #4 (Sell) company, which may continue hurting its margins going forward.
Stocks to Consider
Some better-ranked stocks in the Zacks Industrial Products sector are listed below:
Altra Industrial Motion Corp. sports a Zacks Rank #1 (Strong Buy). The company pulled off an average positive earnings surprise of 4.01% in the past four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Donaldson Company, Inc. (DCI - Free Report) also sports a Zacks Rank of 1. The company delivered an average positive earnings surprise of 2.29% in the preceding four quarters.
Atkore International Group Inc. (ATKR - Free Report) carries a Zacks Rank #2 (Buy). The company generated an average positive earnings surprise of 24.46% in the trailing four quarters.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>