Roper Industries Inc. Earnings Cheat Sheet: Margins Keep Growing, 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 Earnings Cheat Sheet for the Third Quarter

Results: Net income for Roper Industries Inc. rose to $110.3 million ($1.12 per share) vs. $84.3 million (87 cents per share) in the same quarter a year earlier. This marks a rise of 30.9% from the year earlier quarter.

Revenue: Rose 17.8% to $712.7 million from the year earlier quarter.

Actual vs. Wall St. Expectations: ROP beat the mean analyst estimate of $1.08 per share. Analysts were expecting revenue of $719 million.

Quoting Management: “We are pleased to once again deliver record results in the quarter,” said Brian Jellison, Roper’s Chairman, President and CEO. “Our asset-light business model and continued focus on working capital resulted in free cash flow of $157 million, or 142% of net earnings. We delivered organic sales growth of 13% with strength throughout the enterprise. This strong growth combined with outstanding operating performance drove substantial margin expansion in the quarter. We continue to see favorable trends in our businesses and we enter the fourth quarter with a record $876 million in backlog as bookings exceeded revenue for the 9th consecutive quarter.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 21.9%, with the biggest boost coming in the third quarter of the last fiscal year when revenue rose 24.6% from the year earlier quarter.

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 0.5 percentage point to 53.7% from the year earlier quarter. Over that span, margins have grown on average 1.6 percentage points 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 49.1% and in the first quarter, the figure rose 49%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 4 cents in the second quarter, by 4 cents in the first quarter, and by 11 cents in the fourth quarter of the last fiscal year.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the fourth quarter is $1.21 per share, up from $1.20 ninety days ago. Over the past three months, the average estimate for the fiscal year has climbed from $4.14 per to share to $4.26.

Competitors to Watch: Danaher Corporation (NYSE:DHR), ESCO Technologies Inc. (NYSE:ESE), AMETEK, Inc. (NYSE:AME), Emerson Electric Co. (NYSE:EMR), Badger Meter, Inc. (NYSE:BMI), Cognex Corporation (NASDAQ:CGNX), Luna Innovations Inc. (NASDAQ:LUNA), Hurco Companies, Inc. (NASDAQ:HURC), Electro-Sensors, Inc. (NASDAQ:ELSE), and Schmitt Industries, Inc. (NASDAQ:SMIT).

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(Source: Xignite Financials)