Is Roper Technologies (ROP) Starting To Look Attractive After Its Recent Share Price Slump?

• If you are wondering whether Roper Technologies is starting to look interesting at today’s price, you are not alone, especially if you focus on what you are getting for every US$365.00 you put to work.
• The stock has recently faced pressure, with a 10.4% decline over the last 7 days, an 18.9% decline over 30 days, and a 35.6% decline over the past year, contributing to a 16.0% decline year to date.
• These moves sit against a backdrop of ongoing investor attention on software and technology names. Sentiment can shift quickly as markets reassess growth quality, balance sheet strength, and long term cash generation. For Roper Technologies, that reassessment is now front and center, and it is pushing more investors to focus on what the current price says about long term value rather than recent share price performance alone.
• Even after these price moves, Roper Technologies currently scores a full 6 out of 6 on our valuation checks. This means we will compare several traditional valuation methods next, before finishing with a different way of thinking about value that can be even more useful for long term investors.

Find out why Roper Technologies's -35.6% return over the last year is lagging behind its peers.

Approach 1: Roper Technologies Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes the cash Roper Technologies is expected to generate in the future and discounts those projections back to today to estimate what the business may be worth now.

Roper Technologies last reported Free Cash Flow of about $2.42b. Using a 2 Stage Free Cash Flow to Equity model, analysts and extrapolated estimates point to projected Free Cash Flow of $3.37b by 2028, with a series of annual forecasts and extensions running out to 2035. Simply Wall St converts these future cash flows into today’s dollars using a required return, which gives the present value of each year’s projection.

Adding those discounted values together produces an estimated intrinsic value of about $568.61 per share. Compared with the current price of around $365.00, the model suggests Roper Technologies trades at a 35.8% discount, which screens as materially undervalued on this DCF view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Roper Technologies is undervalued by 35.8%. Track this in your watchlist or portfolio, or discover 866 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Roper Technologies.

Approach 2: Roper Technologies Price vs Earnings

For a profitable company like Roper Technologies, the P/E ratio is a useful way to link what you pay per share to the earnings the business is currently generating. Investors usually accept a higher P/E when they expect stronger growth or see lower risk, and a lower P/E when growth expectations or risk assessments are more modest.

Roper Technologies currently trades on a P/E of about 25.3x. That sits below the wider software industry average of roughly 28.8x and well below the peer group average of about 45.1x. To refine this comparison, Simply Wall St uses a proprietary “Fair Ratio” of 31.2x, which is the P/E level suggested by factors such as earnings growth profile, industry, profit margins, market cap and specific risks.

This Fair Ratio can be more useful than a simple industry or peer comparison because it adjusts for the company’s own characteristics rather than assuming all software names deserve the same multiple. Setting the Fair Ratio of 31.2x against the current 25.3x P/E points to Roper Technologies trading below that model based view of fair value on an earnings multiple basis.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1414 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Roper Technologies Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple tool that connects your view of a company with the numbers behind it. A Narrative is your story for Roper Technologies, where you set your own assumptions for fair value and the path of future revenue, earnings and margins, then tie that story to a clear fair value estimate. On Simply Wall St, Narratives sit inside the Community page, where millions of investors use them as an easy way to link a company’s story to a forecast and then to a value they can compare with today’s share price. Narratives help you decide what action to take by lining up your Fair Value against the current Price, and they automatically refresh when new information such as news or earnings is added. For Roper Technologies, one investor might build a Narrative that supports a much higher fair value than today’s price while another might arrive at a far lower figure based on more cautious assumptions about future cash flows and profitability.

Do you think there's more to the story for Roper Technologies? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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