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Roper Technologies (ROP) Up 7.5% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Roper Technologies (ROP - Free Report) . Shares have added about 7.5% in that time frame, outperforming 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 Q3 Earnings Beat,’18 EPS View Up

Roper 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.

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Roper Technologies has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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


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