Roper Technologies Stock Delivers Strong Cash Yield – Upside Ahead?
Roper Technologies (ROP) could be a good pick for your portfolio, with its high cash yield, good fundamentals, and discounted valuation. Companies like this can use cash to fuel additional revenue growth, or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market
What Is Happening With ROP
ROP stock is currently trading at P/S (Price-to-Sales) ratio that is at a meaningful discount to its 3-month and 2-year highs, and also below its 3-year average.
The stock may not reflect it yet, but here is what’s going well for the company. Recent software acquisitions, CentralReach and Subsplash, are projected to contribute significant organic growth. CentralReach is expected to add $175 million in revenue by Q2 2026, with over 20% organic growth, complementing high-teens organic growth from Subsplash. Additionally, new contracts like OhioHealth’s NetMenu deployment across 16 hospitals demonstrate solid customer adoption for specialized solutions. These developments underscore ongoing demand for Roper’s vertical software.
ROP Has Good Fundamentals
- Good Cash Yield: Not many stocks offer free cash flow yield of 5.5%, but Roper Technologies stock does
- Strong Margin: Last 12 month operating margin of 28.1%
- Growth: Last 12 revenue growth of 14.0% – low growth, but this selection is all about high yield and margin
- Valuation: ROP stock currently trading at 31% below 2Y high, 10% below 1M high, and at a PS lower than 3Y average.
Below is a quick comparison of ROP fundamentals with S&P medians.
| ROP | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Electronic Equipment & Instruments | – |
| Free Cash Flow Yield | 5.5% | 3.9% |
| Revenue Growth LTM | 14.0% | 6.4% |
| Revenue Growth 3YAVG | 14.1% | 5.7% |
| Operating Margin LTM | 28.1% | 18.8% |
| Operating Margin 3YAVG | 28.3% | 18.4% |
| PE Ratio | 27.7 | 24.5 |
*LTM: Last Twelve Months
But What Is The Risk Involved?
While ROP stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. ROP slipped 34% in the Dot-Com crash, 50% during the Global Financial Crisis, and 35% around the Covid pandemic. The 2018 correction and recent inflation shock also pushed it down 20% and 27%, respectively. It’s a solid company, but these dips show risk is still real when markets turn sour. Even strong fundamentals don’t always shield you from sharp drawdowns. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read ROP Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
For more details and our view, see Buy or Sell ROP Stock.
Stocks Like ROP
Not ready to act on ROP? Consider these alternatives:
We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- Dipped last month & meaningfully below 2Y high
- Current P/S < last few year average
- Strong operating margin with no instances of large margin collapse
- High free cash flow yield
A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:
- Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
- Win rate (percentage of picks returning positive) of about 74% for 12-month period
- Strategy consistent across market cycles
A Multi Asset Portfolio Gives You Safer Smarter Growth
Individual picks are volatile but diversified assets offset each other. A multi asset portfolio helps you stay the course capture upside and reduce downside.
The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices