Roper Technologies ROP
Technology · Software - Application · Synthos Deep Dive · 2026-07-03
The Overview
Roper is a holding company that buys small, boring, essential software businesses — the kind of niche software a hospital, a law firm, or a toll road can't run without and won't switch away from. It owns dozens of them, lets them run independently, and uses the cash they throw off to buy more. It keeps about 69 cents of gross profit on every sales dollar and generates a lot of cash.
The stock is not expensive right now — in fact it has dropped about 36% over the past year, so you're paying roughly 15–16× next year's expected earnings, which is fair-to-cheap for a business this steady. Our verdict is Buy, but as a smaller "satellite" position — because the business is good, but almost no expert analysts in our library cover it, so we're leaning on the numbers, not a crowd of smart voices.
Here's what our three scores mean in everyday terms:
- Downside Risk 5/10 (middle). The stock doesn't swing wildly and the cash flow is dependable, but the company carries a fair amount of debt, earns most of its money in the US, and just had a rough year in the market.
- Growth Quality 7/10 (good, not elite). Steady ~10–11% growth and fat margins — but it grows by buying companies, and its return on all the money it has spent is only modest.
- Exponential Potential 3/10 (low). This is a slow-and-steady compounder, not a rocket. Don't expect it to double quickly.
The one big worry: Roper's whole model depends on buying good software companies at good prices. When prices for those companies get too high — as the panel warns they have — the machine slows down.
Putting a number on it: our fair-value estimate is $470 against a current price of $426.20 — real upside if our numbers are right.
Our summary metrics
Low beta (0.76) & recurring-software cash flows, but net-debt/EBITDA 2.8×, 87% US, and a −36% 12-mo drawdown.
~11% forward EPS CAGR, 69% gross / 45% EBITDA margins, durable VMS moat — but ROIC only ~6% (goodwill-heavy).
Serial-acquirer compounder, not an accelerant; growth is steady-to-slowing and the $37B cap sits against a deep but not explosive TAM.
What does “fair value” mean?
Fair value is Synthos’s estimate of what one share is worth today, based on our model of the company’s future cash generation and the risks to it. It is not a price target or a prediction of where the stock trades next quarter — it’s the price where we think risk and reward are balanced. Above it, you’re paying for outcomes better than our base case; below it, the market is offering a margin of safety.
The model’s inputs and weightings are proprietary — they’re the product. What we publish is the output, plus an independent, public-math cross-check further down the page (“Check our number”) so you can judge it for yourself.
What do the 5 tiers mean? (Core · Tactical · Watch · Hold · Avoid)
Exponential Potential
Serial-acquirer compounder, not an accelerant; growth is steady-to-slowing and the $37B cap sits against a deep but not explosive TAM.
“Managing to cash return on investment (CRI) rather than EPS drives both higher cash-flow multiples and faster compounding—a double benefit.”
What could take this further than the base case — and where the market may be underpricing it. Full forward-growth and acceleration math in Deeper analysis, §4 below.
Deeper analysis
Technicals, fundamentals, valuation, and the full expert-claim evidence panel — the detail behind the numbers above.
Reference table
| Street consensus | $457.64 (high $550 / low $365 / median $470; 1 Strong Buy · 12 Buy · 7 Hold · 3 Sell) — context, not our anchor |
| Valuation | 22.6× trailing (adj) EPS · 16.6× FY26E · 15.2× FY27E · ~11.8× FY29E · EV/S 5.8× · EV/EBITDA 12.9× |
| Technicals | Downtrend/basing — $364, −36% off 52-wk high, below 200-DMA, above 50-DMA, RSI 73 (overbought bounce), −36% 12-mo (SPY +21%) |
| Conviction | Low — only 1 net-bullish voice (business_breakdowns, conviction 85), 6 reconciled claims; call is fundamentals/quant-driven |
| Position sizing | Satellite, ~1.5–3% — quality but thin coverage + goodwill-heavy model argue for a smaller weight |
What the experts actually said 7 traceable claims on ROP · showing the highest-conviction voices
“Roper's model of acquiring mission-critical niche software with high cash returns and permanent-home decentralization compounds free cash flow durably.”
“Software names like Roper Technologies and Tyler were hit last year on fears AI unwinds their businesses despite consistent growth; thinks that threat is overstated and sees opportunity.”
“Key risks: retaining top business leaders, and finding assets fitting Roper's tight window as deal multiples rose from 7-8x to high-teens EBITDA.”
Every claim reconciles to a real claim_id in the Synthos knowledge base — this is the evidence the verdict is built on, not vibes. Management (the company itself) is shown but half-weighted; one cautionary voice is included on purpose.
Price & moving averages 12 months · 50 & 200-day averages · 52-week range
Solid line = price · dashed line = 50-day average · dotted line = 200-day average · the two thin horizontal lines mark the 52-week high and low. Price above both averages is an uptrend.
Data summary: last close $426.20, 14% above the 50-day average ($375), 13% above the 200-day average ($377) — an uptrend. 19% below the 52-week high of $527, 35% above the 52-week low of $316.
Bollinger Bands 20-day average ± 2 standard deviations
The shaded band widens when the stock gets more volatile. Riding the upper edge = strong momentum (sometimes stretched); the lower edge = weak / potentially oversold.
Data summary: price $426.20 is currently at/above the upper band (stretched) (band $383–$425).
RSI (14) momentum gauge · 0–100
Above 70 (overbought zone, shaded) = overbought, below 30 (oversold zone, shaded) = oversold. Currently 71.
MACD 12 / 26 / 9 · trend & momentum
The MACD line crossing above the signal line (bars flip to the up color) = momentum turning up; crossing below (bars flip to the down color) = turning down. Bar height = the size of that gap.
Data summary: MACD is currently above its signal line by 0.81, positive momentum.
Relative performance vs S&P 500 & its sector (XLK (sector)), set to 100 a year ago
Solid = ROP · dashed = S&P 500 · dotted = XLK (sector). A rising line means it is beating that benchmark — the sector line shows whether it is a leader or laggard within its own group.
Forward revenue & earnings actual → estimate · "FY" = fiscal year, "E" = estimate
Darker bars = actual results, brighter = analyst estimates. Taller bars to the right = expected growth.
Key stats an RIA wants
1. What it is
Roper Technologies (Nasdaq: ROP), founded 1981, based in Sarasota, FL (renamed from Roper Industries in 2015), is a diversified technology company that has transformed itself into a vertical-market-software (VMS) serial acquirer. It buys mission-critical niche software and highly-engineered products across insurance, healthcare, government, education, legal, property, foodservice, and industrial end-markets, runs them on a decentralized "permanent home" model, and redeploys the cash into more acquisitions. FY ends December 31. CEO: Laurence Neil Hunn.
Revenue mix (from filings):
- By segment (last clean split, FY2023): Application Software $3.19B · Network Software & Systems $1.44B · Technology-Enabled Products $1.55B. (Data-quality flag: the FMP product-segment field for FY2024–25 reports a single "Software And Related Services" line of $10.7B / $12.3B, which exceeds total revenue of $7.04B / $7.90B and is clearly a mislabeled/cumulative field — do not use it. The three-segment structure above is the reliable read; software is ~75%+ of revenue and mostly recurring.)
- By geography (FY2025): United States $6.87B (~87%) · Europe $541M · Canada $292M · Rest of World $126M · Asia $71M. The revenue base is heavily US-concentrated — a domestic-demand strength and a US-policy/US-macro concentration risk (§11).
The strategic engine the one bullish voice keeps returning to: acquire mission-critical niche software with high cash returns, decentralize it permanently, and compound free cash flow.
2. The expert thesis — thin coverage, honestly labeled (traceable)
This is NOT a high-conviction KB name. The Synthos knowledge base holds 6 total claims from a single source (business_breakdowns), with just 1 net-bullish voice — a fraction of the breadth behind our flagship conviction names. The verdict here is therefore primarily fundamentals- and quant-driven, with the KB used only as a sanity check. We say that plainly rather than manufacture conviction.
What the one voice actually says:
- The bull case (traceable). business_breakdowns (
business_breakdowns-31Z7H9VfzFE:9170ff5729, bullish, conviction 85, skill 1.0, dated 2023-05-29): "Roper's model of acquiring mission-critical niche software with high cash returns and permanent-home decentralization compounds free cash flow durably." This is the core compounder thesis — categories tagged vertical market software, serial acquirers, compounders. - The same voice's caution (traceable). business_breakdowns (
business_breakdowns-31Z7H9VfzFE:5d886077d2, neutral, conviction 60): "Key risks: retaining top business leaders, and finding assets fitting Roper's tight window as deal multiples rose from 7–8× to high-teens EBITDA." The bull and the bear here come from the same analyst — a candid picture, but a narrow one.
Honest composite note. One net-bullish source, both claims from 2023, is not the multi-voice mosaic behind a Core name. We do not inflate it. The investment case below stands on the financials and valuation, and the single expert voice is directionally consistent with them — no more.
3. Synthos scores & the Bull / Base / Bear cases
The one-glance judgment — three scores, 0–10, each anchored to real metrics (not probabilities we can't honestly calibrate):
| Score | 0–10 | The read |
|---|---|---|
| Downside Risk (lower = safer) | 5 · Moderate | Beta 0.76 and recurring-software cash flows cushion it, but net-debt/EBITDA 2.8×, 87% US revenue, goodwill+intangibles = 90% of assets, and a −36% 12-mo drawdown show it is not bulletproof. |
| Growth Quality | 7 · Good | ~11% forward EPS CAGR, 69% gross / 45% EBITDA / 21% net margins, ~$2.5B FCF and 98% FCF/OCF conversion — but growth is bought (M&A) and ROIC is only ~5.7% on a goodwill-heavy base. |
| Exponential Potential | 3 · Low-Moderate | A durable compounder, not an accelerant. Revenue growth is decelerating (~12% → ~8% forward), and a $37B cap against an M&A-dependent runway caps the multibagger. |
The three cases (our own scenario model — assumptions shown; each target is a ~12–18-month fair value). We deliberately do not attach probabilities: the base case is by definition the expected path, so a weighted blend would just restate it with false precision. The cases bound the range; the scores above summarize them. All EPS figures are adjusted/non-GAAP (the basis analysts and management guide on); GAAP diluted EPS was $14.20 in FY25 — see §5/§6 for the reconciliation.
| Case | Key assumptions | Fair value |
|---|---|---|
| Bull | Acquisition engine redeploys cash at good returns; organic growth holds high-single-digits; FY27E adj. EPS beats to ~$25 (vs $23.9 cons); multiple re-rates to ~22× as the de-rating reverses. | ~$560 (+54%) |
| Base (our anchor) | Estimates roughly hit — FY27E adj. EPS ~$23.9; a durable ~10% compounder with 69% GM and $2.5B FCF earns a ~20× forward multiple (a modest re-rating from today's 15×). | ~$470 (+29%) |
| Bear | Deals get scarce/expensive (the panel's exact risk); organic growth fades; FY27E adj. EPS ~$23; multiple stays de-rated at ~15× (no re-rating). | ~$345 (−5%) |
Synthos fair value = the base case, ~$470 (+29%), with the full $345–$560 span as the honest range. This anchor sits essentially on top of the Street's $457.64 consensus (and its $470 median) — unusual for us, and it reflects that ROP has already de-rated to a level where the math is no longer demanding. Our bear ($345) is just below the Street's $365 low; our bull ($560) matches the Street high. This is a tracked call — the Forecaster Scorecard grades it once it matures.
4. Exponential Potential
Synthos separates compounders (durable high returns on capital) from exponentials (accelerating, multi-baggers-from-here). ROP is a classic compounder, firmly on the compounder end — this is why it scores a low 3/10 here despite being a good business:
- Forward growth: revenue CAGR FY25→FY29E ~10.0% ($7.9B → $11.6B); adj. EPS CAGR ~11.6% ($19.93 → $30.90). Solid, not explosive.
- Acceleration (the 2nd derivative) is roughly flat-to-negative: revenue growth +12.3% (FY25) → +7.7% (FY26E) → +6.4% (FY27E) → ~+7% (FY28E). No inflection here — a steady mid-to-high-single-digit organic + bolt-on machine. Per our flagship philosophy we prize forward accelerants; ROP is the opposite profile — a trailing compounder.
- Room to run: the VMS acquisition universe is deep, so the reinvestment runway is real — but growth is gated by deal availability and price, not by an exploding end-market. At $37B market cap ROP can keep compounding, but a fast 3–5× is not on the table.
- Reinvestment runway: the real story — ~$2.5B/yr FCF redeployed into acquisitions ($3.3B deployed FY25). The engine works if multiples cooperate. That "if" is the whole game (§11).
Exponential Potential: Low-Moderate (3/10). Own ROP for durable ~10–11% earnings compounding and a possible valuation re-rating, not for a fast multibagger. Honest framing is why this sits in the Satellite sleeve, not a moonshot tier.
5. Financials (real numbers — FMP annual/quarterly)
- Revenue: FY25 $7.90B, +12.3% (FY24 $7.04B, +14.0% on FY23 $6.18B). Steady low-teens growth, part organic, part acquired.
- Quarterly trajectory: Q1'25 $1.88B → Q2 $1.94B → Q3 $2.02B → Q4 $2.06B → Q1'26 $2.10B (+11.3% YoY). Smooth, dependable — the signature of a recurring-software base.
- Margins: gross 69.4% TTM, EBITDA 44.8%, operating ~28%, net 21.1% TTM. Best-in-class for a diversified industrial-software mix.
- Earnings — GAAP vs adjusted (important): GAAP net income $1.536B FY25, GAAP diluted EPS $14.20. Analysts and management guide on adjusted EPS (which excludes ~$0.87B of acquisition-driven amortization): FY25 adj. EPS ~$19.93, and the earnings calendar confirms adjusted beats (Q1'26 adj. $5.16 vs $4.99 est). Read GAAP for the balance-sheet reality; read adjusted for the run-rate the multiples price on.
- Cash flow: operating CF $2.54B FY25, capex only −$47M (asset-light software), FCF ~$2.49B (FCF/OCF 98%, FCF yield ~6.9%). Cash conversion is the crown jewel.
- Balance sheet: total debt $9.3B, net debt $9.0B, net-debt/EBITDA 2.8× — investment-grade but meaningfully levered; goodwill $21.3B + intangibles $9.8B = 90% of $34.6B total assets. Current ratio 0.53 (deferred revenue inflates current liabilities — normal for software). ROIC ~5.7%, ROE ~8.8% — modest because the asset base is acquisition-inflated.
6. Valuation — the de-rating did the work
Unlike most quality compounders, ROP is not demanding today. It has fallen ~36% in 12 months, and the multiples reflect it:
- Trailing: 22.6× adjusted EPS, EV/EBITDA 12.9×, EV/Sales 5.8×, P/FCF 14.4×.
- Forward (adj. EPS): 16.6× FY26E ($21.90) → 15.2× FY27E ($23.91) → ~11.8× FY29E ($30.90). For a business compounding EPS ~11% with 69% gross margins and 98% FCF conversion, a 15× forward multiple is fair-to-cheap — this is the crux of the constructive base case.
- PEG: trailing PEG ~1.5×; the forward multiple compresses fast even at a flat price if estimates hit.
- On GAAP the picture is richer (25–26× GAAP EPS) because of amortization — which is why we flag the two bases explicitly rather than cherry-pick the flattering one.
Street targets (context): consensus $457.64, high $550, low $365, median $470; FMP letter grade B+. Our $470 base FV lands right on the Street median — a rare case where we and the sell-side agree the stock has already corrected to fair value. Not a value trap, not a screaming bargain — a good business at a fair-to-slightly-cheap price after a hard year.
7. Technicals (from the tech block)
- Trend: down / early basing. $364 sits above the 50-DMA ($337) but below the 200-DMA ($398) — the 50 under the 200 is a downtrend posture, though the recent bounce off the 50 hints at basing. MACD +3.8 (mildly positive, near-term).
- Location: −36.4% off the 52-wk high ($575.77), +15.4% off the 52-wk low ($305.96); max drawdown from peak −38.7%. This is a fallen leadership name, not one near highs.
- Momentum: RSI(14) 72.9 — overbought. The recent rally is stretched short-term; a pullback would not be surprising, so scale in rather than chase.
- Relative strength (the tell, and it's ugly): ROP −36.4% 12-mo vs SPY +20.6% and QQQ +30.3%; −19% 6-mo vs SPY +8%. Only the 3-mo (+2.3%) shows stabilization. Persistent underperformance is the market pricing the "deals-are-expensive / growth-slowing" fear.
- Read: technicals do not yet confirm the fundamental re-rating thesis — they show a value-recovery setup, not momentum. Overbought RSI argues for patience on entry; a hold of the 50-DMA and a reclaim of the 200-DMA (~$398) would be the technical confirmation.
8. Moat & competitive position
Roper's moat is structural, not product-specific: a portfolio of dozens of niche VMS businesses, each a small monopoly in its vertical with high switching costs and recurring revenue, plus a capital-allocation moat — a proven, disciplined M&A machine that sources and integrates deals better than most. The recurring-revenue base (deferred revenue $1.9B) and 69% gross margins are the evidence. The competitive threat is not a single rival but auction-market pricing for the assets it buys: as private-equity and strategics bid deal multiples from 7–8× to high-teens EBITDA (the panel's exact flag), Roper's edge narrows.
Peer set (market cap): AMETEK $53.8B, Cummins $91.3B, W.W. Grainger $63.4B, PACCAR $62.9B, Carrier $58.2B, Fastenal $55.8B, Rockwell Automation $52.5B, Ferguson $44.7B, Xylem $28.1B, Symbotic $4.9B. Most are diversified industrials rather than pure VMS comps — ROP's software mix earns it a premium margin profile within this group, though the peer list understates how much it now resembles a software compounder more than a classic industrial.
9. Management, capital allocation & guidance
- Capital allocation (the core competency): ~$2.5B/yr FCF redeployed primarily into acquisitions — $3.29B deployed on M&A in FY25 — plus a modest, growing dividend ($3.47/sh, ~1.0% yield, payout ~21%) and opportunistic buybacks ($500M repurchased FY25). Debt rose to fund deals (net-debt/EBITDA 2.8× vs 2.5× prior) — leverage is the fuel, and the discipline that keeps it investment-grade is the thing to monitor.
- Insider activity: the sampled window (filings 2026-05-21) shows only routine director stock awards (A-Award, ~1,191 shares each at $0) — annual board equity grants, not open-market conviction buys or alarming discretionary sells. Neutral signal.
- Management as a KB voice: we have no management claims in the Synthos KB for ROP and no analyst-Q&A transcript on the current FMP plan — a coverage gap. Guidance here is inferred from reported results and Street estimates, not from an ingested earnings-call transcript. Gap flagged for the plan note.
10. Catalysts & what to watch
- Next earnings: 2026-07-23 (Q2'26; Street adj. EPS $5.29, revenue ~$2.10B). Watch organic growth rate (is the software base still growing high-single-digits without deals?) and M&A cadence/multiples paid.
- Capital deployment: size and price of new acquisitions — the single biggest driver of the compounding math. Deals at high-teens EBITDA that don't clear the return bar are a red flag.
- Leverage trajectory: net-debt/EBITDA back toward ~2.5× would signal the balance sheet is re-arming for the next deal wave; drifting above ~3.5× would raise risk.
- Organic vs acquired growth split: management's disclosed organic rate is the tell on moat durability.
- A reclaim of the 200-DMA (~$398): the technical confirmation the re-rating is underway.
Thesis tripwires (what would change the call): two+ quarters of low-single-digit or negative organic growth; acquisition returns visibly compressing (goodwill impairments, falling incremental ROIC); leverage above ~3.5× net-debt/EBITDA; or FCF conversion slipping below ~90%.
11. Key risks
- The acquisition engine stalls (structural, the #1 risk). The panel's own caution: assets fitting Roper's window are scarce as deal multiples rose to high-teens EBITDA (
business_breakdowns-31Z7H9VfzFE:5d886077d2). If ROP can't buy well, the compounding model — its entire growth story — breaks. - Goodwill-heavy, low-ROIC base. Goodwill+intangibles = 90% of assets; ROIC ~5.7%. A wave of misjudged deals could surface as impairments and value destruction.
- Leverage. Net-debt/EBITDA 2.8×, current ratio 0.53 — serviceable against $2.5B FCF, but it limits flexibility and adds rate sensitivity.
- US concentration. ~87% of revenue is US — exposed to US macro, rates, and policy, with little geographic diversification.
- De-rating / momentum. The stock is down 36% in 12 months and below its 200-DMA; a "quality that keeps falling" tape can persist longer than the fundamentals justify.
- Thin expert coverage. Only 1 net-bullish voice / 6 claims (both 2023) — less independent validation than our Core names carry. This is a fundamentals-led call, and we size it accordingly.
12. Verdict, position sizing & monitoring
Buy — Tactical. Roper is a genuinely high-quality vertical-market-software compounder — 69% gross margins, ~$2.5B FCF, 98% cash conversion, a durable moat — that has de-rated ~36% into a fair-to-cheap ~15× forward multiple, giving a constructive ~+29% base-case setup that both we and the Street median ($470) agree on. What holds it back from Core status is honest: coverage is thin (one net-bullish voice), growth is steady rather than accelerating (Exponential 3/10), the model is goodwill-heavy and levered, and the technicals haven't confirmed the turn.
- Sizing: satellite, ~1.5–3% of the flagship — a quality holding to own, but the thin KB, M&A-dependence, and unconfirmed technicals argue against a full Core weight. Scale in given the overbought RSI; a hold of the 50-DMA is a reasonable adds level.
- Monitoring: re-underwrite on the §10 tripwires (organic growth, deal multiples, leverage, FCF conversion); formal re-score each earnings print. Logged as a tracked Synthos call as of 2026-07-03 at $364.20.
- Single biggest risk: the acquisition engine stalling as deal multiples stay high — the whole compounding thesis depends on Roper buying well.
Provenance & disclosures
- Traceability: 6 KB claims, breadth 1 net-bullish voice, top skill 1.0 (business_breakdowns), last claim 2023-05-29 — both cited inline reconcile to real
claim_ids. Fabricated conviction is structurally impossible (claim-ID reconciliation). This is explicitly a thin-coverage, fundamentals/quant-driven verdict, stated as such. - Data as-of: fundamentals 2026-03-31 (Q1'26) · estimates & prices 2026-07-02/03 · expert claims 2023-05-29. Forward figures are analyst consensus (FMP), labeled as estimates. EPS figures are adjusted/non-GAAP unless marked GAAP; GAAP diluted EPS was $14.20 (FY25).
- Data-quality flag: the FMP product-segment field for FY2024–25 ("Software And Related Services" > total revenue) is unreliable and was excluded; the FY2023 three-segment split was used instead.
- Not investment advice. Independent research, educational and informational only, never personalized. Hypothetical/forward figures are labeled; the only performance numbers Synthos will headline are the live, real-money Flagship's.
- Version: 2026-07-03. Prior versions available via the deep-dive version dropdown ("based on the info at the time").