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Why Roper Technologies Fell Short of Market Expectations in 2Q16

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Jul. 28 2016, Published 2:15 p.m. ET

How did the Market react to Roper Technologies’ 2Q16 earnings?

Roper Technologies (ROP) announced its 2Q16 results on July 25, 2016, before Market hours. The company missed its earnings forecasts for 2Q16, sending ROP shares downward, touching a low of $159.28 during early trading. The stock closed at $163.22, a 1.0% fall from the opening price of $165.

On a year-over-year basis from July 27, 2015, to July 27, 2016, ROP rose 1.0%. The broad-based S&P 500 Index (SPY) rose 4.0%. On a year-to-date basis to July 27, 2016, ROP fell 11.0%.

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Why Roper Technologies missed its earnings target for 2Q16

On a quarterly basis, ROP’s adjusted EPS (earnings per share) stood at $1.56, below Wall Street analysts’ consensus of $1.61 per share. For the same quarter last year, EPS was $1.70. In 2Q16, EPS was unfavorably impacted by lower revenues (15% lower year-over-year) and operating profits (26% lower year-over-year) for its energy systems and controls segment. It was affected mainly by the oil and gas sector.

On a half-year basis, ROP’s adjusted EPS was $3.02 per share compared to $3.22 per share in the first half of 2015. That was a fall of 6.6%.

ROP’s management has given guidance of $1.59–$1.63 per share for 3Q16. For 2016, ROP expects to report adjusted EPS of $6.57–$6.71 per share, a fall of 2.0%–4.0% compared to 2015.

Roper Technologies and its peers

ROP’s large-capitalization peers are General Electric (GE), Honeywell (HON), and Illinois Tool Works (ITW). GE declared its results on July 22, 2016. Its adjusted EPS (earnings per share) was $0.51, which was 11.8% above the consensus of $0.46 per share. EPS was favorably impacted by a $0.20 increase in appliance unit sales and a $0.10 increase on the back of restructuring.

HON also declared its results on July 22, 2016. Its 2Q16 EPS was $1.66 per share, a rise of 10.0% compared to $1.51 in 2Q15.

ITW announced its 2Q16 results on July 20, 2016. Its 2Q16 EPS was strong at $1.46 per share, a rise of 12.3% compared to $1.30 in 2Q15.

In the next part of the series, we’ll look at Roper Technologies’ revenues in 2Q16.

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