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Opinions David Driscoll
Roper Technologies Inc.ROPBUYNov 01, 2017
David DriscollStock price when the opinion was issued
As of Jun 12, 2026. Market Open.
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ROP has been roughly sideways for the last few years now. Up until 2023, top-line growth hasn't been the most inspiring but it looks like the company is getting back to a more consistent 10% range of revenue growth and roughly 9% EPS growth. Fundamentally it is a solid company as well with good margins and return metrics. We think the 'issue' with ROPis just that it is in a bit of a grey zone between valuation and growth. At 25X forward earnings, it is not really expensive given the fundamentals but also not a 'steal' at these levels. Meanwhile, the growth rate is probably just low enough to not really get investors excited about it either. We like the name and think it is fine, but probably just needs a bit of a catalyst to get investors caring about it again.
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Recent results were pretty good, and announced a new acquisition. Shares trading sideways, very good long-term compounder and this should continue.
Brian MaddenTransitioning from hardware, now almost purely in software. Serial acquirers, only now is it easier to find deals at more reasonable valuations. High WACC is more a function of it being a small company, with market cap only ~$60B (high interest rates impact small companies the most).
Over time, ROIC will drive higher than WACC as it gets larger and continues to execute.
Recent all time high of the stock good for shareholders. American version of Constellation Software (Canada). Dividend has grown at ~ 14% annually the past 10 years. M&A skill very good - usually pay cash and is friendly. Excellent growth prospects for the long term investor.
Brian Madden
Bryden TeichBryden Teich
Bryden TeichHe has admired them for a long time. They are an aggregator of smaller niche profitable businesses. This generates a lot of cash and is well diversified. They have evolved into more digital technology companies and has adapted well. He would scale into a buy as it is pretty expensive here.
They generate so much cash that they are able to pay off most of their debt quickly, so they can then make the next acquisition. They are also into areas such as medical software, TAG technology for the toll roads in Texas, Florida, New Jersey and New York State, and a little bit of oil and gas. They got into the right sectors at the right time. They eschewed all the old industrial stuff they used to have, but still keeps the high margin stuff. They have margins in the 63% range. He still buys this for new clients.