Roper Industries Inc. (ROP) reported third-quarter 2014 non-GAAP earnings of $1.54 per share, beating the Zacks Consensus Estimate by a penny. Earnings per share increased 13.3% on a year-over-year basis, driven by robust revenue growth.
Quarter Details
Roper's total revenue increased 6% year over year to $885 million in the reported quarter, which missed the Zacks Consensus Estimate of $888 million. Acquisitions and divestitures accounted for 2% of the revenue growth in the quarter. Organic revenues increased 4% on a year-over-year basis. Orders increased 6.8% year over year to $884.1 million.
Growth across most of its business segments contributed to the year-over-year increase in revenues. Revenues from Medical & Scientific Imaging and RF Technology increased 13.3% and 1.8% year over year to $268.8 million and $238.9 million, respectively. Industrial Technology and Energy Systems & Controls moved up 2.5% and 10.1% year over year to $205.7 million and $170.8 million, respectively.
Gross profit increased 6.9% year over year to $525.4 million. Gross margin in the reported quarter increased 100 bps on a year over year basis to 59.4% in the given quarter, primarily driven by a better mix and higher revenues.
Income from operations increased 12% year over year to $271.7 million. The upside in operating income was attributable to improved sales. Operating margin improved from 26.5% to 27.8% on a year-over-year basis.
Net income was $155.5 million or $1.54 per share compared with $136.3 million or $1.36 per share in the year-ago quarter.
Roper exited the quarter with $564.1 million in cash and cash equivalents and total debt of $2.36 billion (including the current portion) compared with $565.3 million in cash and cash equivalents and total debt of $2.23 billion (including the current portion) in the previous quarter. Roper reported operating cash flow of $226 million and free cash flow of $217 million in the third quarter.
During the quarter, the company acquired two medical solution providers namely Strategic Healthcare Programs (SHP) and Innovative Product Achievements (IPA) for an unknown amount.
Guidance
Roper expects fourth quarter adjusted earnings to be between $1.75 and $1.81 per share. For the full year, the company expects adjusted earnings to be in the range of $6.32 – $6.38 per share, up from the previous guidance of $6.27 – $6.37. The Zacks Consensus Estimate for 2014 is pegged at $6.33 per share.
Recommendation
Roper reported encouraging third quarter results. Also, management provided an upbeat guidance for 2014.
We believe that a strong backlog coupled with robust organic growth will drive earnings going forward. Moreover, accretive acquisitions will expand the company's product portfolio, providing it a significant competitive edge over its peers.
However, macroeconomic concerns, integration issues due to acquisitions and competition from Danaher Corp. (DHR), Dover Corp (DOV) and Ingersoll-Rand Plc (IR) are possible headwinds for the company.
Currently, Roper has a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment