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Roper (ROP) Q2 Earnings Surpass Estimates, Revenues Miss

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Roper Technologies, Inc. (ROP - Free Report) delivered second-quarter 2019 positive earnings surprise of about 1%.

Adjusted earnings were $3.07 per share, surpassing the Zacks Consensus Estimate of $3.04. Also, the bottom line increased 6.2% from the year-ago quarter number of $2.89 backed by solid revenue growth.

Inside the Headlines

Roper’s adjusted revenues came in at $1,332 million, up 3% year over year. The rise was primarily driven by 2% organic growth and 2% gain from acquired assets, partially offset by 1% adverse impact of unfavorable movements in foreign currencies. However, the top line missed the Zacks Consensus Estimate of $1,351 million.

Notably, GAAP revenues came in at $1,330 million, up from the year-ago reported figure of $1,294 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 $390.6 million, representing 29.4% of the reported quarter’s revenues. On a year-over-year basis, the segment’s revenues grew 9%.

Network Software & Systems segment generated revenues of $366.8 million, accounting for roughly 27.6% of second-quarter revenues. Sales grew 9.9% year over year.

Measurement & Analytical Solutions segment generated revenues of $408.4 million, accounting for roughly 30.7% of the quarter’s top line. Sales declined 4.1% year over year.

Process Technologies segment generated revenues of $164.5 million, accounting for roughly 12.3% of the June-ended quarter’s revenues. Sales edged down 6.4% year over year.

Margin Details

In the April-June quarter, Roper’s cost of sales increased 0.5% year over year to $480.3 million. Cost of sales was 36.1% of the quarter’s revenues compared with 36.9% a year ago. Adjusted gross profit in the quarter increased 4% to $852 million, with margin at 64%, reflecting expansion of 90 basis points (bps).

Selling, general and administrative expenses jumped 4.3% year over year to $481.6 million. It represented 36.2% of total revenues compared with 35.7% in the year-ago quarter. Operating profit jumped 4% to $415.1 million with margin of 31.2%, up 30 bps.

Balance Sheet & Cash Flow

Exiting the second quarter, Roper had cash and cash equivalents of $320.8 million compared with $364.4 million recorded on Dec 31, 2018. Long-term debt decreased 4.5% to $4,718.9 million from the end of 2018.

In first six months of 2019, the company generated net cash of $591.1 million from operating activities, roughly 7.9% higher from the year-ago period.

Capital expenditure during the second quarter totaled $12 million, lower than the year-ago figure of $13 million. Free cash flow in the quarter was up 14% to $286 million.

Outlook

For 2019, adjusted earnings per share are anticipated to be $12.94-$13.06, higher than the range of $12.70-$13.00 guided earlier.

For the third quarter of 2019, earnings are projected to be $3.16-$3.20 per share.

Zacks Rank & Other Key Picks

Roper currently sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the same space are DXP Enterprises, Inc. (DXPE - Free Report) , AptarGroup, Inc. (ATR - Free Report) and Avery Dennison Corporation (AVY - Free Report) . While DXP Enterprises sports a Zacks Rank #1, AptarGroup and Avery Dennison carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DXP Enterprises delivered average earnings surprise of 48.47% in the trailing four quarters.

AptarGroup pulled off average positive earnings surprise of 8.27% in the trailing four quarters.

Avery Dennison outpaced estimates in the last reported quarter by 1.10%.

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