ROP 567.07 (+1.42%)
US7766961061Industrial ProductsSpecialty Industrial Machinery

Last update on 2024-06-07

Roper Technologies (ROP) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Roper Technologies' (ROP) Piotroski F-Score for 2023 is 5/9, evaluating profitability, liquidity, and efficiency based on 9 financial criteria.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 5

We're running Roper Technologies (ROP) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
1
Current Ratio is growing?
0
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
1

The Piotroski F-Score analysis of Roper Technologies (ROP) reveals a score of 5 out of 9, reflecting moderate strength in its financial position. The score evaluates ROP's profitability, liquidity, and operational efficiency across various criteria. ROP shows strong profitability and operating efficiency, highlighted by positive net income, positive cash flow, and operating cash flow exceeding net income. It has also managed to reduce leverage, indicating decreasing financial risk. However, areas needing improvement include a declining return on assets (ROA), a decreasing current ratio indicating lowering liquidity, minor dilution with an increase in outstanding shares, and a slight reduction in gross margin despite outperforming industry peers. The asset turnover ratio, however, has shown improvement, reflecting better utilization of assets to generate revenue.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score of 5, Roper Technologies (ROP) presents a mixed bag for potential investors. While the company demonstrates robust profitability and efficient cash flow management, there are concerns regarding its decreasing ROA and current ratio, potential shareholder dilution, and slightly declining gross margin. Therefore, further investigation into these aspects and additional analysis may be necessary before making an investment decision. For now, it could be a cautious 'hold' but not an outright 'buy' without addressing the highlighted issues.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Roper Technologies (ROP)

Company has a positive net income?

Assessing net income is crucial as it reflects a company’s profitability. Positive net income indicates financial health.

Historical Net Income of Roper Technologies (ROP)

Roper Technologies reported a net income of $1,384,200,000 in 2023, which is positive, awarding it 1 point in the Piotroski criteria. Over the past two decades, ROP's net income has seen substantial growth, though with some fluctuations. For example, net income surged to $454,470,000 in 2022 and $1,767,900,000 in 2019, highlighting robust long-term profitability. This trend signifies that the company has generally maintained strong earnings, reinforcing its financial stability.

Company has a positive cash flow?

Cash flow from operations (CFO) measures the amount of cash a company generates from its regular operating activities. It is essential to consider as it shows if a company can sustain its operations and grow without requiring external financing.

Historical Operating Cash Flow of Roper Technologies (ROP)

Roper Technologies' cash flow from operations in 2023 is $2,035,100,000, which is indeed positive. This positive cash flow indicates a stable financial standing and suggests that Roper Technologies has successfully generated sufficient cash from its operating activities. A historical view of the last 20 years reveals a consistent upward trend with only a minor dip in 2022. This stability and growth in CFO is a strong indicator of the company's operational efficiency and ability to sustain growth. Hence, this criterion is awarded 1 point. In summary, the trend is very positive and reflects sound financial health.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures the efficiency of a company in generating profit from its assets. A higher ROA indicates better asset utilization.

Historical change in Return on Assets (ROA) of Roper Technologies (ROP)

Examining Roper Technologies (ROP), the Return on Assets (ROA) in 2023 stands at 0.0502, a decrease from 0.1793 in 2022. This decline suggests less efficient asset utilization over the past year, prompting us to assign 0 points for this criterion. Additionally, historical ROA trends and industry median comparisons reinforce ROP's dwindling asset efficiency. A stark contrast to the industry median ROA of approximately 0.3492 emphasizes areas for potential improvement for Roper Technologies.

Operating Cashflow are higher than Netincome?

If the operating cash flow is higher than net income, it signifies good quality of earnings. Cash flow is harder to manipulate than net income, providing a clearer picture of financial health.

Historical accruals of Roper Technologies (ROP)

In 2023, Roper Technologies' operating cash flow stood at $2,035.1 million, while its net income was $1,384.2 million, making the operating cash flow higher than the net income. This results in adding 1 point to the Piotroski F-Score. Over the last 20 years, the company's operating cash flow has shown a steady upward trend, increasing from $71.3 million in 2003 to $2,035.1 million in 2023. Net income has also generally increased, peaking in 2022 at $4,544.7 million before dropping to $1,384.2 million in 2023. This decline in net income but increase in cash flow suggests effective cash management. Hence, the trend is good for this Piotroski criterion.

Liquidity of Roper Technologies (ROP)

Leverage is declining?

The Change in Leverage criterion evaluates the change in the financial leverage ratio from the previous year. It is a measure of a company's financial risk, indicating the proportion of debt used to finance the company's assets.

Historical leverage of Roper Technologies (ROP)

Upon comparing the leverage ratio of 0.221 in 2022 to 0.207 in 2023, it's evident that the leverage for Roper Technologies (ROP) has decreased in this period. This reduction is significant as it signifies that the company has reduced its reliance on debt financing. A decreasing leverage generally indicates improved financial health and reduced risk, which is favorable from an investor’s standpoint. Over the last 20 years, ROP's leverage has generally fluctuated within a range, peaking at 0.416 in 2003 and maintaining a downward trend in recent years. Given the decrease in leverage in 2023, ROP earns 1 point for this criterion, reflecting its ongoing efforts to bolster financial stability. This trend is particularly encouraging as it can lower the cost of capital and enhance the company's creditworthiness.

Current Ratio is growing?

The Current Ratio compares a company's current assets to its current liabilities. It measures liquidity and the company's ability to cover short-term obligations. An increasing Current Ratio typically indicates improving liquidity.

Historical Current Ratio of Roper Technologies (ROP)

For Roper Technologies (ROP), the Current Ratio in 2023 stands at 0.4999, down from 0.6681 in 2022. This decrease implies a reduction in liquidity, meaning the company is less able to cover its short-term liabilities with its short-term assets. Historically, the Current Ratio for Roper has been in decline, and it is dwarfed in comparison to the industry's median, which stands at 1.7757 in 2023. Since the Current Ratio has decreased in 2023, no point would be added in the Piotroski score for this criterion.

Number of shares not diluted?

The criterion examines the change in shares outstanding to assess potential shareholder dilution.

Historical outstanding shares of Roper Technologies (ROP)

Roper Technologies has seen an increase in the number of outstanding shares from 105.9 million in 2022 to 106.6 million in 2023, a rise of about 0.66%. This increase is indicative of potential shareholder dilution, as the expansion of the share count disperses ownership across more shares, thereby possibly lowering the value of each existing share. Historically, over the past two decades, Roper has consistently increased its number of shares, from 63.98 million in 2003 to the current 106.6 million. This long-term trend of rising shares suggests a systematic approach to either raising capital through equity issuance or utilizing shares for compensation, acquisitions, or other corporate activities. Such a strategy can raise capital for growth but must be carefully managed to avoid dilutive impacts.

Operating of Roper Technologies (ROP)

Cross Margin is growing?

Gross Margin represents the percentage of revenue that exceeds the cost of goods sold. It is a measure of manufacturing and financial efficiency.

Historical gross margin of Roper Technologies (ROP)

For 2023, Roper Technologies (ROP) has a Gross Margin of 0.6972 compared to 0.6986 in 2022, showing a slight decrease of 0.0014. The trend over the last 20 years indicates a consistent lead over the industry's median gross margin, with ROP's lowest margin being 0.4997 in 2005 and peaking at 0.705 in 2021. Other observed values include the industry median's max margin of 0.3616 in 2021. Despite the slight decrease in 2023, ROP consistently outperforms the industry median, reflecting robust financial health and operational efficiency.

Asset Turnover Ratio is growing?

Change in Asset Turnover measures how effectively a company uses its assets to generate sales.

Historical asset turnover ratio of Roper Technologies (ROP)

The Asset Turnover ratio for Roper Technologies has increased from 0.2119 in 2022 to 0.224 in 2023. An increase in Asset Turnover indicates that Roper Technologies has enhanced its efficiency in utilizing its assets to generate revenue. This positive trend is crucial for investors as it demonstrates improved operational efficiency, garnering a point for the Piotroski Analysis. Historically, while the recent figures show there is room for improvement compared to past years, the upward trend remains promising.


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