QS Research · Michael Burry's Scion Capital analyst template · 2006
ROPER TECHNOLOGIES INC (ROP)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction medium · base case none · downside -12% · upside +10%
Roper is a high-quality, software-heavy compounder: FY2025 gross margin was 69.2%, operating margin 28.4%, TTM operating cash flow is $2.62B, and Q3 2026 organic growth was 6.7% with FY2026 adjusted DEPS guidance raised to $22.35-$22.40. But at $476.60 the stock trades at 17.1x TTM EV/EBITDA and 23.8x EV/EBIT; at that same multiple my base-case value is essentially today's price. Unlike section 13's peer-multiple brackets, I keep 17.1x across all three cases because no non-valuation catalyst justifies a re-rating. The 18.2x P/E is flattered by Indicor revaluation gains, since TTM net income of $2.59B exceeds TTM EBIT of $2.37B. The downside case (10% EBITDA decline at 17.1x) is about -12% and the upside case (8% EBITDA growth at 17.1x) is about +10%, so there is no 30% margin of safety and no short thesis. The market is not missing a temporary problem; it is pricing a good business at a fair-to-full multiple.
Key numbers
- Share price: $476.60
- Market cap: $47.20B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $8.43B
- EV / EBITDA (TTM): 17.1x
- P/E (TTM): 18.2x
- Price / book: 2.46x
The 15 boxes
- ✓ 1. Long-form business notes
Roper is described in the latest 10-K as a diversified technology company selling vertical software and technology-enabled products into defensible niche markets; FY2025 revenue was $7.90B, split 56.7% Application Software, 20.3% Network Software and 23.0% Technology Enabled Products. The oldest 10-K provided, FY2020, reported four segments including industrial Measurement & Analytical Solutions and Process Technologies; the latest reports three segments after the November 2022 Indicor divestiture and treats Indicor as discontinued operations for all periods presented. Roper sells primarily through direct sales offices, manufacturers’ representatives, resellers and distributors, and has deployed large amounts of capital into software acquisitions; the sources do not disclose unit economics.
- ✓ 2. Competitive advantage
The record shows a high-margin, high-cash-conversion business but not a classic single-product moat: gross margin held at 69-71% and operating margin at about 27-28% across FY2020-FY2025 while revenue rose from $4.02B to $7.90B. The FY2025 10-K says Roper meets significant competition, is a leader in most markets, and faces no single company across many product lines, competing partly on price; no customer was 10% or more of 2025 revenue. Intellectual property is a broad portfolio rather than any single-item dependence, and the FY2025 10-K's new risk-factor language flags AI commoditization as a threat to differentiation, while growth is described as highly dependent on acquisitions.
- ✓ 3. 10-Q takeaways
Q3 2026 revenue rose 7.6% to $2,171.8M with organic growth of 6.7%, and total gross margin expanded to 70.1% from 69.5%; GAAP net earnings jumped 22% to $485M but included a $56.2M pre-tax Indicor equity gain and a 15.3% tax rate, while adjusted net earnings rose 5% and adjusted DEPS 15%. Nine-month operating cash flow was $1,882.2M (+4%), buybacks consumed $2,724.1M with no Q3 repurchases, and the earnings release raised FY2026 adjusted DEPS guidance to $22.35-$22.40. The 10-Q updates one IT/cybersecurity risk factor and says no other material risk-factor changes.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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