Roper Technologies: High Recurring Vertical Software Franchise With Multi-Year Portfolio Optimization

Hunter Wolf Research
2.7K Followers

Summary

  • Roper Technologies has a decentralized operating structure and a broad range of software portfolios, enabling them to achieve double-digit sales growth and mid-teens free cash flow growth.
  • Roper has actively managed its portfolios, divesting 34% of FY19 sales while upgrading to more recurring revenue and higher-margin software businesses, improving their EBITDA margin from 36% in FY19 to 40% in FY22.
  • Despite some slower customer demands at Deltek, Roper is targeting double-digit sales growth and expects their free cash flow to grow at a mid-teen rate.

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Roper Technologies (NASDAQ:ROP) owns a high-quality set of highly recurring revenues from its software portfolios. They have a very broad range of end markets, and Roper is either the top or the second-ranked player in most of these small

This article was written by

2.7K Followers
More than 15 years of professional investment experience in global equities across all sectors. My investment style is fundamental, bottom-up, long-term, and quality growth-oriented. I am seeking companies specializing in niche markets, with strong growth potential, a solid management team, a sound capital allocation policy, and, most importantly, reasonable valuation. I do not chase quarterly results, nor do I follow the herd mentality. I do not use short-term stock performance as the measure of a company's quality. I am targeting to achieve a 15% annual return in my portfolio. I typically construct my portfolio with 15-20 stocks, focusing on diversification of holdings, risk management, macro-driven sector weights, and disciplined trading and valuations as key factors.Disclosure: Lighting Rock and I are working in the same investment team. I am writing here independently.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of ROP either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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