Exclude valuation from the conversation, and I’m not sure how many negatives you can really come up with for Roper (ROP). Not only has Roper shown that it can identify, execute, and integrate acquisitions just as well as peers like Danaher (DHR)
but management has used M&A to transform the business into a
self-funding, niche-focused, asset-light multi-industrial with a very
strong recurring revenue component driven by a diverse SaaS and
medical/healthcare business. Although the ROIC is lower than you might
otherwise expect, that doesn’t trouble me much given the strong
demonstrated cash flow generation ability.
Roper
isn’t cheap by any approach I use, but I do like the company’s
end-market exposures and business model for this point in the cycle, as
well as the “dry powder” the company has to make further value-enhancing
acquisitions. And while the shares aren’t cheap, they’re not too far
from my DCF-based fair value and this would be a very tempting name on
another market sell-off.
Click here for more:
Roper Getting Its Due As A Differentiated Value-Creator
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