Roper Technologies, Inc. ROP has been benefiting from strength across its segments and accretive acquisitions. The company's efforts to reward its shareholders handsomely add to its appeal.

Based in Sarasota, FL, Roper designs, manufactures and distributes software and technology-enabled products and solutions. It caters to selected segments of a broad range of markets, which include legal, healthcare, government, food, transportation, oil & gas, medical and other niche industries. ROP currently carries a Zacks Rank #3 (Hold). Roper belongs to Zacks Computers - IT Services industry.

Growth Catalysts of ROP

Business Strength: Strength across its Deltek, Frontline, Strata, PowerPlan and Aderant businesses is benefiting Roper’s Application Software segment. It is witnessing strength in the property and casualty insurance, project-based private sector, healthcare and legal markets. The growing adoption of SaaS solutions and continued GenAI innovation bode well for Aderant.

Solid demand for SaaS solutions in the GovCon sectors and expanding GenAI functionality are key catalysts for the Deltek business. Increased renewal activity in the Frontline business is also driving the segment’s performance. The Strata business is gaining from strong demand for its leading decision support and financial planning solutions in the healthcare market. Strong customer retention and adoption of new SaaS solutions are aiding the PowerPlan business.

Strength across alternate site healthcare businesses, driven by increased demand for software solutions at MHA, is supporting the Network Software segment. Solid demand for Gen AI-powered solutions within the ConstructConnect business is aiding the Network Software segment.

The solid performance of the Neptune business, due to continued demand for ultrasonic metes and increasing adoption of meter data management software, is fostering the growth of the Technology enabled Products segment. Strong momentum in the Verathon business, due to strength across single-use BFlex & GlideScope offerings and continued BladderScan demand, bodes well for the segment.

Acquisitions: Roper has been strengthening its business through acquisitions. In December 2024, it completed the acquisition of Trucker Tools LLC through its business unit, DAT Freight & Analytics. The acquisition will enable ROP to strengthen DAT's real-time GPS tracking and load optimization features on the DAT One platform. In August 2024, Roper inked a deal to acquire Transact Campus for $1.5 billion. The inclusion of Transact’s expertise in campus technology and payment solutions will enable the company to boost its CBORD business, which provides food service, nutrition, access and security and campus commerce solutions.

In February 2024, the company acquired Procare Solutions for $1.75 billion. The buyout expanded Roper’s software offerings in the education sector. In August 2023, the company acquired cloud-based performance management and data solutions provider, Syntellis Performance Solutions, for $1.25 billion. The acquired entity has been integrated into Roper’s Strata Decision Technology business, which is part of the Application Software segment.

Rewards to Shareholders: Roper remains committed to rewarding its shareholders handsomely through dividend payouts. The company’s dividend payments totaled $241.1 million, up 10.9% year over year in the first nine months of 2024. In November 2024, it hiked its dividend by 10%. It is worth noting that in 2023, the company rewarded its shareholders with a dividend payment of $290.2 million, up 10.6% year over year.

Headwinds for ROP

High Costs: The company has been dealing with the adverse impacts of high cost of sales and operating expenses. In the first nine months of 2024, the cost of sales rose 13.3% year over year and selling, general and administrative expenses increased 11.8%. Higher costs related to the amortization of acquired assets are pushing up operating expenses. Escalating costs, if not controlled, may impede the company’s bottom line.

High Debt Level: Roper’s long-term debt witnessed a compound annual growth rate of 4.5% from 2019 to 2023. By the end of third-quarter 2024, the company's long-term debt (net of current portion) had risen to $7.7 billion, reflecting an almost 32% increase from the end of 2023, primarily due to funding raised for acquisitions. The current portion of its long-term debt (net) was approximately $699 million, exceeding its cash equivalents of $269.6 million.

Stocks to Consider

Some better-ranked companies from the same space are discussed below.

Clarivate Plc CLVT currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CLVT delivered a trailing four-quarter average earnings surprise of 5.2%. In the past 60 days, the Zacks Consensus Estimate for Clarivate’s 2024 earnings has remained steady.

DXC Technology Company DXC presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 22.2%.

In the past 60 days, the consensus estimate for DXC’s fiscal 2025 earnings has increased 1.3%.

EPAM Systems, Inc. EPAM presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 9.9%. 

The Zacks Consensus Estimate for EPAM’s 2024 earnings has increased 0.8% in the past 60 days.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Roper Technologies, Inc. (ROP) : Free Stock Analysis Report

EPAM Systems, Inc. (EPAM) : Free Stock Analysis Report

DXC Technology Company. (DXC) : Free Stock Analysis Report

Clarivate PLC (CLVT) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research