Roper (ROP) Boosts Product Portfolio With Vertafore Buyout

Roper Technologies, Inc. ROP yesterday announced the completion of the acquisition of Denver, CO-based Vertafore. The transaction — valued at $5.35 billion in cash — was originally announced by Roper on Aug 13, 2020.

The shares of the company declined 3.1% yesterday, ending the trading session at $429.97.

Vertafore is a leading provider of cloud-based software solutions, designed for simplifying, and automating the property, and casualty insurance lifecycle. Notably, the company’s services are used by more than 20,000 agencies as well as 1,000 insurance carriers for streamlining their processes and improving efficiency.

Details of the Buyout

As noted, Roper paid the acquisition price by using available cash, liquidity under revolving credit facility and funds raised through debt issuance. (For more information on funds raised through debts in the recent past, please read: Roper Closes $2.7B Notes Offering, To Use Proceeds for Buyout)

Since the transaction is complete now, it is worth mentioning here that Vertafore’s identity — its name, brands and office sites — remains the same. It will run under the leadership of its CEO Amy Zupon.

Roper believes that Vertafore’s efficient management team, solid market position and customer retention policies will be beneficial. The buyout will help generate revenues of $590 million and earnings before interest, tax, depreciation and amortization (EBITDA) of $290 million in 2021. In addition, cash accretion is predicted immediately from the buyout.

Roper’s Buyout Activities

The company believes in acquiring businesses to improve its product lines and market exposure. It used $2.4 billion for making acquisitions in 2019 and $153 million in the first half of 2020.

In June 2020, Roper acquired entire assets of Freight Market Intelligence Consortium as well as that of Team TSI Corporation. These two acquisitions were integrated with Roper’s Network Software & Systems segment. In addition, Roper purchased iPipeline Holdings and ComputerEase Software in August 2019. In April 2019, Roper acquired Foundry.

It is worth mentioning here that buyouts positively impacted revenues by 2% in first-quarter 2020 and 1% in second-quarter 2020.

Zacks Rank, Estimate Trend and Price Performance

With a market capitalization of $46.5 billion, Roper currently carries a Zacks Rank #2 (Buy). The company is likely to gain from its strengthening medical product and network software businesses, cost-control measures, and buyouts.

In the past three months, its share price has rallied 6% compared with the industry’s growth of 4.8%.

The Zacks Consensus Estimate for its earnings is pegged at $12.46 for 2020 and $14.33 for 2021, reflecting growth of 2.6% and 10.6% from the respective 60-day-ago figures. However, earnings estimates of $2.98 for the third quarter have been lowered 3.2% in the past two months.

Roper Technologies, Inc. Price and Consensus

 

Roper Technologies, Inc. Price and Consensus

Roper Technologies, Inc. price-consensus-chart | Roper Technologies, Inc. Quote

Other Stocks to Consider

Three other top-ranked stocks in the industry are Tennant Company TNC, Altra Industrial Motion Corp. AIMC and Graco Inc. GGG. While Tennant and Altra Industrial currently sport a Zacks Rank #1 (Strong Buy), Graco carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for these companies have improved for the current year. Further, earnings surprise in the last reported quarter was 380.00% for Tennant, 76.47% for Altra Industrial and 37.04% for Graco.

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