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Roper (ROP) Q1 Earnings & Revenues Surpass Estimates

Roper Technologies’ ROP first-quarter 2023 adjusted earnings of $3.90 per share surpassed the Zacks Consensus Estimate of $3.85. This compared unfavorably with our estimate of $3.84 per share. On a year-over-year basis, earnings increased 3.5%.

Roper’s net revenues of $1,469.7 million beat the Zacks Consensus Estimate of $1,442 million. This compared unfavorably with our estimate of $1,434.8 million. The top line increased 14.8% year over year. Organic sales in the quarter increased 8%, owing to strength across each of the three segments. Acquisitions/divestitures boosted sales by 8%. However, movements in foreign currency translation had an adverse impact of 1%.

Segmental Performance

Roper has divested its Process Technologies segment and industrial units of the Measurement & Analytical Solutions segment. Beginning from the second quarter of 2022, the company started reporting under three segments namely — Application Software, Network Software and Technology Enabled Products.

Application Software’s revenues totaled $761.4 million, representing 51.8% of the quarter’s top line. This compared unfavorably with the Zacks Consensus Estimate of $704 million. Our estimate for the quarter was $704.2 million. On a year-over-year basis, the segment’s revenues increased 21.2%. Organic sales in the quarter increased 6%.

Network Software & Systems generated revenues of $354.5 million, accounting for 24.1% of first-quarter revenues. This compared unfavorably with the Zacks Consensus Estimate of $369 million. Our estimate for the quarter was $368.5 million. Segmental revenues grew 4.7% year over year. Organic sales in the quarter increased 6%.

Technology Enabled Products generated revenues of $353.8 million, accounting for 24.1% of the quarter’s revenues. Our estimate for the quarter was $362.1 million. Sales were up 13% year over year. Organic sales in the quarter grew 14%.

Roper Technologies, Inc. Price, Consensus and EPS Surprise

 

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Roper Technologies, Inc. price-consensus-eps-surprise-chart | Roper Technologies, Inc. Quote

Margin Profile

In the reported quarter, Roper’s cost of sales increased 17.9% year over year to $451.1 million. The cost of sales was 30.7% of the quarter’s net sales. Gross profit in the quarter grew 13.4% to $1,018.6 million, while the gross margin increased to 70.1% from 69.3% in the year-ago quarter.

Selling, general and administrative expenses increased 14.1% to $617.6 million. The same represented 42% of net sales in the reported quarter. Adjusted EBITDA was $582 million, reflecting year-over-year growth of 15%. The margin decreased 10 basis points to 39.6%. Interest expenses fell 28.9% year over year to $37.4 million.

Balance Sheet & Cash Flow

Exiting first-quarter 2023, Roper had cash and cash equivalents of $1,181.6 million compared with $792.8 million at the end of December 2022. Long-term debt (net of current portion) increased to $5,964.4 million from $5,962.5 million at the end of the fourth quarter of 2022. In the first three months of 2023, ROP did not make any repayment under the revolving line of credit.

Roper generated net cash of $463.7 million from operating activities in the first three months of 2023, reflecting a decline of 2.4% from the year-ago level. Capital expenditure totaled $9.8 million compared with $5.4 million in the year-ago quarter.

In the first three months of 2023, ROP rewarded its shareholders with a dividend payment of $72.3 million, up 10.7% year over year.

2023 Outlook

For 2023, ROP predicts adjusted earnings per share from continuing operations of $16.10-$16.30 compared with the previously mentioned $15.90-$16.20.

For the second quarter, Roper anticipates earnings per share of $3.96-$4.00.

Zacks Rank & Other Stocks to Consider

ROP currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies are discussed below:

Alamo Group Inc. ALG presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.

ALG’s earnings surprise in the last four quarters was 6.0%, on average. In the past 60 days, estimates for Alamo’s 2023 earnings have increased 7.5%. The stock has gained 17.5% in the past six months.

Ingersoll Rand Inc. IR presently sports a Zacks Rank of 1. IR’s earnings surprise in the last four quarters was 8.5%, on average.

In the past 60 days, estimates for Ingersoll Rand’s 2023 earnings have increased 3.3%. The stock has rallied 5.8% in the past six months.

Allegion plc ALLE presently carries a Zacks Rank of 2. ALLE’s earnings surprise in the last four quarters was 10.3%, on average.

In the past 60 days, Allegion’s earnings estimates have increased 1.1% for 2023. The stock has gained 1.2% in the past six months.

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Allegion PLC (ALLE) : Free Stock Analysis Report

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