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ROP – Market expectations are for record-high Uniform ROA, but management may have concerns about revenue growth, free cash flow, and customer engagement

March 17, 2021

  • Roper Technologies, Inc. (ROP:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 27.6x Uniform P/E, implying bullish expectations for the firm. However, management may have concerns about organic revenue growth, free cash flow, and customer engagement
  • Specifically, management may lack confidence in their ability to maintain growth across their MAS segment business lines, sustain free cash flow recovery, and achieve their targeted organic growth, particularly in their network segment and Neptune business. In addition, they may have concerns about continued declines in organic revenue and the sustainability of normalized levels of customer engagement. Furthermore, they may lack confidence in their ability to sustain recurring revenue from GlideScope and maintain a healthy liquidity position, and they may be downplaying concerns about municipality budgets