Roper Earnings: Mostly As Expected, Though Exceptional Performance in Water and Healthcare

Nothing in wide-moat Roper’s second-quarter results materially alters our long-term view. We raise our fair value estimate to $540 from $530. Despite modeling a slightly better near-term outlook, the raise is primarily due to time value of money. Most of Roper’s businesses performed as expected, though we did tweak our technology-enabled products’ expectations to the upside, thanks to continued resilience in Neptune (water meters). While stocks aren’t particularly cheap, Roper remains one of our better comparable picks among U.S. multi-industry names. We think of the firm as a high-quality cash compounder, with a large runway for success, that trades at slightly below fair value.