Roper Industries Earnings: Margins Expand, Net Income Climbs

S&P 500 (NYSE:SPY) component Roper Industries Inc. (NYSE:ROP) reported its results for the third quarter. Roper Industries designs and manufactures energy systems and controls, scientific and industrial imaging products and software, industrial technology products and radio frequency products and services.

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Roper Industries Inc. Earnings Cheat Sheet

Results: Net income for Roper Industries Inc. rose to $116.7 million ($1.17 per share) vs. $110.3 million ($1.12 per share) in the same quarter a year earlier. This marks a rise of 5.8% from the year-earlier quarter.

Revenue: Rose 4.9% to $747.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Roper Industries Inc. fell short of the mean analyst estimate of $1.23 per share. Analysts were expecting revenue of $747 million.

Quoting Management: “Our businesses continued to perform exceptionally well in the quarter,” said Brian Jellison, Roper’s Chairman, President and CEO. “Strong operating performance led to substantial margin expansion in all four of our segments. We achieved record free cash flow of $197 million, representing 26% of revenue. In addition, gross margin increased to 56% in the quarter. Despite the uncertain economic outlook, we remain confident our high-quality, asset-light businesses will continue to perform well.”

Key Stats:

Last quarter marked the fifth consecutive quarter of gross margins expanding, as the company’s gross margin expanded two percentage points from the year-earlier quarter to 55.7%. Over that span, margins have grown, on average, 0.9 percentage point per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 8% and in the first quarter, the figure rose 21.7%.

Revenue has increased for four quarters in a row. Revenue increased 3.6% to $724.9 million in the second quarter. The figure rose 10.2% in the first quarter from the year earlier and climbed 8.8% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company fell short of estimates last quarter after being in line with expectations the quarter before with net income of $1.15.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the fourth quarter has moved up from $1.37 a share to $1.44 over the last ninety days. For the fiscal year, the average estimate has moved up from $4.83 a share to $4.91 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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