Roper Technologies Inc (ROP)

Conclusion

Roper Technologies builds vertical software and technology-enabled products, spanning application software, network software and a technology-enabled products segment. The stock closed at 471.64 USD on 9 November 2026, giving a market capitalisation of 46.7 billion USD.

The verdict is undervalued, with a margin of safety of 39.7% at that price. The fair value band runs from 527.11 to 790.67 USD, with a midpoint of 658.89 USD. Today's price-to-earnings ratio of 18.0x compares with a ten-year median of 36.9x, a premium of -51.2%. The discounted cash flow gives 583.10 USD per share at a discount rate of 8.9%, and the fair value from historical multiples is 734.68 USD. The reverse DCF implies growth of 5.3% a year, against revenue growth of 10.2% a year over five years and free cash flow per share growth of 10.6% a year over the same period.

What supports the case is the cash generation: free cash flow conversion of 98.8% over the last twelve months, eight earnings beats out of eight quarters, and an operating margin of 28.1%. What would break it is the liquidity position, with a current ratio of 0.43 and net debt of 2.14x EBITDA, together with a return on invested capital of 9.6% that sits only 1.6 points above the cost of capital.

Financial health

Financial strength is yellow: the Altman Z-score of 3.11 and interest coverage of 8.4x hold it up, while the current ratio of 0.43 pulls it down. The quick ratio is 0.33, and net debt to EBITDA is 2.14x, which is flagged for watching rather than as a problem. Debt to equity is 0.51. The Altman model was designed for manufacturers, so its zone of safe is an indication rather than a verdict for a software company. Insolvency risk is low, about 0.2% by the estimate of the Ohlson model over one to two years. The company's current liabilities are well above its current assets, which is typical of software businesses with deferred revenue, but it leaves little cushion if cash flow weakens.

Earnings quality

Earnings quality is green, with free cash flow conversion of 98.8% over the last twelve months and 138.6% over five years, both supporting the reported profit. Accruals are negative at -3.05%, meaning cash earnings exceed accounting earnings. Stock-based compensation is 2.4% of revenue, and free cash flow after it is 2.36 billion USD. The share count has grown by an annual average of 0.39% over five years, so there is no meaningful buyback effect. The Piotroski score is 6 out of 9, and the Beneish M-score of -2.46 is in the unlikely range for manipulation. The company beat earnings expectations in all eight of the last eight quarters, by an average of 1.5%. Analysts raised current-year estimates 17 times in the last 30 days with no cuts, and next-year estimates show a 90-day change of 1.5%, with 10 raises and 6 cuts.

Profitability

Profitability is green. The gross margin of 69.7% is above its ten-year median of 68.3%, and the operating margin of 28.1% is in line with its median of 28.0%. The net margin of 30.7% sits well above its median of 21.6%. Operating margins have been stable, with a variation of 2.9%. Return on invested capital is 9.6% against a weighted cost of capital of 8.0%, a neutral reading of 1.6% above it, and the five-year median return on invested capital is only 5.9%. Return on equity is 13.5%. The DuPont split for 2025 shows a net margin of 19.4%, an asset turnover of 0.23 and an equity multiplier of 1.74, so the return is driven by margins rather than leverage.

Growth

Growth is green. Revenue has compounded at 13.7% a year over three years, 10.2% over five years and 8.2% over ten years. Earnings per share have grown at 8.6% over three years, 9.7% over five years and 7.6% over ten years. Free cash flow per share grew 54.9% a year over three years, but the five-year rate of 10.6% is the steadier guide. Revenue has risen in eight of the last ten years. Analysts expect earnings per share growth of 10.0% next year, which is in line with the five-year track record.

Valuation

Valuation is green. The price-to-earnings ratio of 18.0x is a premium of -51.2% to its ten-year median of 36.9x, the EV-to-EBITDA of 12.8x is -42.7% below its median of 22.3x, and the price-to-free-cash-flow of 18.3x is -28.7% below its median of 25.6x. The price-to-sales of 5.5x is -27.4% below its median of 7.6x, and the price-to-book of 2.4x is -35.8% below its median of 3.8x. The discounted cash flow gives 583.10 USD per share at a discount rate of 8.9%, with 58.8% of the value coming from the terminal value. The reverse DCF implies growth of 5.3%, against five-year revenue growth of 10.2%. The fair value is an order of magnitude built on fixed assumptions, not a price target. The dividend yield is 0.79%, with a payout of 14.5% of free cash flow.

Risks

The weakest number is the current ratio of 0.43, which means short-term obligations are large relative to liquid assets; a slowdown in cash collection would tighten this position quickly. Net debt of 2.14x EBITDA leaves less room to absorb weaker earnings or higher borrowing costs. A return on invested capital only 1.6 points above the cost of capital means that any fall in margins or rise in capital needs would narrow the value created. The discounted cash flow depends heavily on the terminal value, which is 58.8% of the result, so it should be read with caution. The company does not report a debt maturity schedule or revenue by segment, so refinancing risk and segment trends cannot be assessed. The analysis rests on the figures above and does not cover company events after the dates they refer to.