Roper's Share Price Has Flattened, While The Compounder Model Hums Along

To paraphrase a long-time reader, it's worth asking if Roper (NYSE:ROP) is more wily or Wile E. Coyote - is this M&A-driven decentralized growth model truly something special (and something sustainable), or has valuation run off the cliff with nothing left to support it other than the fact investors haven't yet looked down?

Valuation is never an exact process, but I do think Roper is more the former (a special company/model) than the latter (a sentiment-driven future train wreck). Roper doesn't buy growth so much as it buys market share, moats, and margins (three M's, that 3M (MMM) would do well to copy in its M&A strategy), and the company's decentralized model gives it a range of potential targets that is far wider than almost any of its peers. What's more, the company is increasingly software-centric, given its asset-light model with high recurring revenue and less cyclicality. I'm not suddenly reversing course and declaring Roper a bargain, but I do at least see why investors value this company as they do.

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Roper's Share Price Has Flattened, While The Compounder Model Hums Along