RO

Roper Technologies Inc

ROP
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Roper Technologies Inc AI Insights

Informational only. Not investment advice.
As of 2025-12-10

Snapshot

  • Goodwill of 21.3B is 107% of equity (19.9B) - tangible book value is NEGATIVE (-11.3B). Acquisition-dependent model carries material impairment risk.[Goodwill]
  • FCF conversion exceptional: 2.4B FCF TTM on 1.6B net income = 153% conversion. Capex only 1.5% of revenue enables cash hoarding.[Free Cash Flow TTM]
  • Operating margin 28.1% TTM vs industry median of 0% - asset-light software model generates outsized profits with minimal capital.[Operating Margin TTM]

Watch Triggers

  • Goodwill: Any impairment charge >500M — Would signal acquisition strategy missteps and could wipe 2.5%+ of equity per occurrence
  • Free Cash Flow TTM: FCF margin drops below 25% — Would indicate integration issues or pricing pressure in acquired businesses
  • Interest Expense TTM: Rises above 400M (>30% increase) — Signals refinancing at higher rates, compressing FCF available for M&A

Bull Case

Asset-light compounder: 69% gross margin, 28% operating margin, 31% FCF margin with only 158M in PPE. Minimal reinvestment needed to sustain growth.

Gross Margin TTMOperating Margin TTMFree Cash Flow TTMPPE

Negative working capital (-1.3B) means customers pre-pay - ROP gets float to fund operations and acquisitions interest-free.

Working CapitalCurrent LiabilitiesAccounts Receivable

Bear Case

Goodwill/intangibles of 31.3B is 91% of total assets (34.6B). Any acquisition write-down devastates equity and triggers covenant concerns.

Goodwill and Other Intangible AssetsTotal AssetsCommon Stockholders Equity

9.5B debt at 302M interest expense (3.2% avg rate) faces refinancing risk. Interest coverage of 7.2x healthy but rate-sensitive.

Total DebtInterest Expense TTMEBIT TTM

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
60%

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Forward Thesis

M&A engine will drive 10-15% revenue CAGR as 2.4B annual FCF funds bolt-on acquisitions

1-3ymed
  • 1.3B deployed in acquisitions TTM
  • Net debt/EBITDA of 2.9x leaves capacity
  • Vertical software targets command premium multiples
Purchase of Business TTM: -1.3B3Y Revenue CAGR: 14.3%FCF TTM: 2.4B (31% margin)
Valuation Context
Caveats

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