Analyst Note| Joshua Aguilar |
Nothing in wide-moat Roper’s latest results materially alters our long-term view of the stock. The firm mildly beat the top end of its adjusted diluted EPS range of $3.66, or where we were projecting earnings to land this quarter, by a dime per share. However, adjusting our projections had a negligible impact to our long-term discounted cash flow model. We raise our fair value estimate to $474 from $467 previously, or about 1.5%. Most of this was due to time value of money, although some of this was offset by implementing Morningstar’s probability-adjusted U.S. corporate tax projection of 26% in 2022 and beyond. That said, there were puts and takes to this impact, since we readjusted the multiples we assume Roper pays for future acquisitions based on the expected tax rate.