Tags: Roper | growth | niches | ROP

Roper Coaxes Growth from Strong Niches

By    |   Wednesday, 02 Nov 2011 11:09 AM

Digging into diversified niches has served Roper Industries (ROP) well. The Sarasota, Fla. company is a keen competitor in four sectors: industrial technology; energy systems and controls; scientific and industrial imaging; and radio frequency technology. So far this year, Roper stock has managed to eke out a slight gain by focusing on strong niches.

A focus on productivity improvement solutions is paying off. For example, Roper makes industrial products such as water meters, industrial controls and flow measurement equipment, which accounted for 25 percent of 2010 sales. The energy systems group (21 percent of sales) helps oil and gas companies boost their efficiency. These core markets share a need for value-added, engineered products that earn above-average margins, add S&P analysts.

Gobbling up acquisitions is part of Roper’s growth plan. In June, it added Northern Digital, which makes 3D measurement technology for the medical industry. Last year, Roper snapped up cardiac monitor device maker Heartscape and food industry supply chain developer iTradeNetwork.

So far, Roper is notching double digit growth. Third-quarter, sales rose 18 percent to a record $713 million versus $605 million last year. Net earnings rose 31 percent. Organic sales rose 13 percent. Roper CEO Brian Jellison added that “bookings exceeded revenue for the ninth consecutive quarter.”

Highly valued

Roper’s downside: a high P/E of 20. Of the 14 analysts followed by Thomson/First Call, five have strong buy recommendations and two have buys, with seven holds.

S&P analysts rate Roper a hold, citing its current valuation. They do praise Roper’s rapidly growing international sales, propriety product portfolio and acquisition strategy, though.

The company reports next in late January.

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Digging into diversified niches has served Roper Industries (ROP) well. The Sarasota, Fla. company is a keen competitor in four sectors: industrial technology; energy systems and controls; scientific and industrial imaging; and radio frequency technology. So far this year,...
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2011-09-02
Wednesday, 02 Nov 2011 11:09 AM
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