Roper Goes Back To The M&A Well, As COVID-19 Highlights Some Of The Business Model's Advantages

Roper (ROP) is typically covered by sell-side analysts who otherwise cover industrial companies and "multi-industrial" conglomerates, and while it is most definitely a conglomerate, its diverse acyclical markets and high recurring revenue mix really put it in a category of its own. And that's certainly true for the valuation as well - even by the aggressive standards of software industry valuation, Roper seldom ever screens as fairly-valued, let alone cheap.

Roper's second-quarter results provide ammunition, though, as to how and why the company really is different. In a quarter where many companies have reported double-digit organic revenue declines and 25%-plus decremental margins, Roper posted a low-single-digit decline and a margin improvement. Likewise, while the deal for Vertafore adds even more goodwill and debt to the balance sheet, it's a logical deal for a leading player in a large space that generates attractive margins.

Read the full article here: 

Roper Goes Back To The M&A Well, As COVID-19 Highlights Some Of The Business Model's Advantages