QS Research · Michael Burry's Scion Capital analyst template · 2006
ROPER TECHNOLOGIES INC (ROP)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +0% · downside -36% · upside +15%
Roper is a high-quality vertical-software compounder, but the market is not missing that: at $476.60 the stock trades at 23.4x TTM EV/EBITDA and 23.8x EV/EBIT, a premium to the 16.3x peer median. On the section 13 base — TTM EBITDA $2.41B at the current 23.4x, less $9.05B net debt, over 99.04M shares — value is ~$478, essentially today's price (~0%). The 16.3x peer-median case is ~$305 (-36%) and the 26.2x high-peer case is ~$546 (+15%), so neither the long nor short rule is met. I would watch, not own or short: the P/E of 18.2x is an artifact of TTM net income ($2.59B) exceeding EBIT ($2.37B), and the operating multiple already discounts above-peer growth.
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): 23.4x
- P/E (TTM): 18.2x
- Price / book: 2.46x
The 15 boxes
- ✓ 1. Long-form business notes
Roper is a diversified technology company that sells vertical software and technology-enabled products into defensible niche markets where it claims market-leading or near-leading positions; FY2025 revenue was $7.90B, split Application Software $4,483.0 (56.7%), Network Software $1,600.8 (20.3%) and Technology Enabled Products $1,818.7 (23.0%). Between the FY2020 report and the FY2025 report the portfolio was reshaped: the November 2022 sale of a majority stake in the industrial businesses (all of the historical Process Technologies segment plus the industrial businesses in Measurement & Analytical) cut the segment count from four to three and left Application Software at 56.7% of revenue versus 32.6% in FY2020. Growth has been acquisition-led — about $8,960 deployed in 2023-2025 (CentralReach ~$1,850, Procare ~$1,860, Transact Campus ~$1,600, Syntellis ~$1,380) after $6 billion in 2020 including Vertafore at ~$5.4 billion — with revenue moving from $4.02B (FY2020) to $7.90B (FY2025) and operating cash flow from $1.53B to $2.54B.
- ✓ 2. Competitive advantage
The advantage is portfolio-niche, not a single moat: Roper claims leadership in most of its markets with only a limited number of competitors per niche and no single company competing across many of its product lines (FY2025 10-K), and it earns and keeps roughly 69-70% gross margin and 27-28% operating margin across FY2020-FY2025 while revenue nearly doubles ($4.02B to $7.90B). Cash backs it up: FY2025 operating cash flow of $2.54B exceeds operating income of $2.24B with $898.2M of D&A. It is a compounder of acquired niche franchises, not an organic-growth franchise — the 10-K says growth is 'highly dependent on our ability to acquire and successfully integrate new businesses'. The sources do not name a single competitor, so the durability claim is self-asserted, not externally verified.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30) revenue was $2,171.8M, up 7.6% with organic growth of 6.7%, and nine-month revenue was $6,376.0M, up 9.1% (organic +5.8%). Gross margin rose to 70.1% in Q3 2026 from 69.5%, and operating margin to 28.7% from 28.4%; segment margins were mixed, with Network Software and Technology Enabled Products down year over year. Reported net earnings are not the operating story: nine-month 2026 net earnings of 33.9% of revenue versus 19.0% in 2025 includes a $1,058.7M equity investment gain and a 14.0% tax rate, both tied to the Indicor transactions. Cash generation and backlog both grew (operating cash flow $1,882.2M, backlog +9.4%) and the company spent $2,724.1M on buybacks in the nine months with none in Q3.
- ✓ 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
- ○ 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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