IMIAF - With Core Growth Slowing Roper's Valuation Case Is Harder To Make
Summary
- Roper reported in-line revenue and slightly weaker-than-expected segment-level profits for the fourth quarter.
- Management's guidance for mid-single-digit revenue suggests greater deceleration here than for many industrial software players.
- I'm concerned that Roper is getting less and less incremental benefit from M&A, having to leverage the business more and pay higher multiples but not really improving the growth/margin outlook.
- M&A adjusted revenue and FCF growth of 9% to 11% can support today's price, but I want a greater margin of safety given what I believe is a riskier business model going forward.
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With Core Growth Slowing, Roper's Valuation Case Is Harder To Make