Intrinsic value of Roper Technologies - ROP

Previous Close

$233.10

  Intrinsic Value

$270.76

stock screener

  Rating & Target

hold

+16%

  Value-price divergence*

-16%

Previous close

$233.10

 
Intrinsic value

$270.76

 
Up/down potential

+16%

 
Rating

hold

 
Value-price divergence*

-16%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ROP stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 23.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  5.81
  20.40
  18.86
  17.47
  16.23
  15.10
  14.09
  13.18
  12.37
  11.63
  10.97
  10.37
  9.83
  9.35
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.69
  6.52
  6.36
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
Revenue, $m
  3,790
  4,563
  5,424
  6,372
  7,405
  8,524
  9,725
  11,007
  12,369
  13,807
  15,321
  16,910
  18,572
  20,309
  22,119
  24,005
  25,966
  28,005
  30,125
  32,327
  34,616
  36,995
  39,468
  42,040
  44,716
  47,501
  50,401
  53,423
  56,572
  59,857
  63,284
Variable operating expenses, $m
 
  3,077
  3,494
  3,954
  4,455
  4,997
  5,580
  6,202
  6,862
  7,559
  8,293
  8,199
  9,005
  9,847
  10,724
  11,639
  12,589
  13,578
  14,606
  15,674
  16,784
  17,937
  19,136
  20,383
  21,680
  23,031
  24,437
  25,902
  27,429
  29,021
  30,683
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  2,736
  3,077
  3,494
  3,954
  4,455
  4,997
  5,580
  6,202
  6,862
  7,559
  8,293
  8,199
  9,005
  9,847
  10,724
  11,639
  12,589
  13,578
  14,606
  15,674
  16,784
  17,937
  19,136
  20,383
  21,680
  23,031
  24,437
  25,902
  27,429
  29,021
  30,683
Operating income, $m
  1,054
  1,486
  1,929
  2,418
  2,950
  3,526
  4,145
  4,806
  5,507
  6,248
  7,028
  8,711
  9,568
  10,462
  11,395
  12,366
  13,376
  14,427
  15,519
  16,653
  17,833
  19,058
  20,332
  21,657
  23,036
  24,470
  25,964
  27,521
  29,143
  30,835
  32,601
EBITDA, $m
  1,294
  2,480
  2,947
  3,462
  4,024
  4,632
  5,285
  5,982
  6,721
  7,503
  8,326
  9,189
  10,093
  11,036
  12,020
  13,045
  14,110
  15,219
  16,370
  17,567
  18,811
  20,104
  21,448
  22,845
  24,300
  25,813
  27,389
  29,031
  30,743
  32,527
  34,390
Interest expense (income), $m
  105
  203
  262
  327
  398
  476
  560
  651
  747
  850
  958
  1,072
  1,191
  1,317
  1,447
  1,583
  1,725
  1,873
  2,027
  2,186
  2,352
  2,524
  2,703
  2,889
  3,083
  3,284
  3,494
  3,712
  3,940
  4,177
  4,424
Earnings before tax, $m
  941
  1,283
  1,667
  2,091
  2,552
  3,050
  3,585
  4,155
  4,760
  5,398
  6,070
  7,639
  8,376
  9,146
  9,948
  10,783
  11,651
  12,554
  13,492
  14,467
  15,481
  16,534
  17,629
  18,768
  19,953
  21,186
  22,470
  23,809
  25,204
  26,659
  28,177
Tax expense, $m
  282
  346
  450
  565
  689
  824
  968
  1,122
  1,285
  1,458
  1,639
  2,063
  2,262
  2,469
  2,686
  2,911
  3,146
  3,390
  3,643
  3,906
  4,180
  4,464
  4,760
  5,067
  5,387
  5,720
  6,067
  6,428
  6,805
  7,198
  7,608
Net income, $m
  659
  936
  1,217
  1,526
  1,863
  2,227
  2,617
  3,033
  3,475
  3,941
  4,431
  5,577
  6,115
  6,676
  7,262
  7,871
  8,505
  9,164
  9,849
  10,561
  11,301
  12,070
  12,869
  13,700
  14,565
  15,466
  16,403
  17,380
  18,399
  19,461
  20,569

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  757
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  14,325
  16,355
  19,440
  22,837
  26,543
  30,552
  34,857
  39,453
  44,332
  49,487
  54,914
  60,609
  66,568
  72,792
  79,281
  86,038
  93,068
  100,377
  107,974
  115,868
  124,072
  132,599
  141,463
  150,681
  160,272
  170,255
  180,650
  191,480
  202,768
  214,541
  226,824
Adjusted assets (=assets-cash), $m
  13,568
  16,355
  19,440
  22,837
  26,543
  30,552
  34,857
  39,453
  44,332
  49,487
  54,914
  60,609
  66,568
  72,792
  79,281
  86,038
  93,068
  100,377
  107,974
  115,868
  124,072
  132,599
  141,463
  150,681
  160,272
  170,255
  180,650
  191,480
  202,768
  214,541
  226,824
Revenue / Adjusted assets
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
  0.279
Average production assets, $m
  3,216
  3,870
  4,599
  5,403
  6,280
  7,228
  8,247
  9,334
  10,489
  11,708
  12,992
  14,340
  15,749
  17,222
  18,757
  20,356
  22,019
  23,748
  25,546
  27,414
  29,354
  31,372
  33,469
  35,650
  37,919
  40,281
  42,740
  45,303
  47,973
  50,759
  53,665
Working capital, $m
  332
  -27
  -33
  -38
  -44
  -51
  -58
  -66
  -74
  -83
  -92
  -101
  -111
  -122
  -133
  -144
  -156
  -168
  -181
  -194
  -208
  -222
  -237
  -252
  -268
  -285
  -302
  -321
  -339
  -359
  -380
Total debt, $m
  6,210
  7,487
  9,338
  11,376
  13,600
  16,005
  18,588
  21,346
  24,273
  27,366
  30,622
  34,039
  37,615
  41,349
  45,242
  49,297
  53,515
  57,900
  62,458
  67,195
  72,117
  77,233
  82,552
  88,083
  93,837
  99,827
  106,064
  112,562
  119,335
  126,399
  133,768
Total liabilities, $m
  8,536
  9,813
  11,664
  13,702
  15,926
  18,331
  20,914
  23,672
  26,599
  29,692
  32,948
  36,365
  39,941
  43,675
  47,568
  51,623
  55,841
  60,226
  64,784
  69,521
  74,443
  79,559
  84,878
  90,409
  96,163
  102,153
  108,390
  114,888
  121,661
  128,725
  136,094
Total equity, $m
  5,789
  6,542
  7,776
  9,135
  10,617
  12,221
  13,943
  15,781
  17,733
  19,795
  21,966
  24,243
  26,627
  29,117
  31,712
  34,415
  37,227
  40,151
  43,190
  46,347
  49,629
  53,039
  56,585
  60,273
  64,109
  68,102
  72,260
  76,592
  81,107
  85,816
  90,730
Total liabilities and equity, $m
  14,325
  16,355
  19,440
  22,837
  26,543
  30,552
  34,857
  39,453
  44,332
  49,487
  54,914
  60,608
  66,568
  72,792
  79,280
  86,038
  93,068
  100,377
  107,974
  115,868
  124,072
  132,598
  141,463
  150,682
  160,272
  170,255
  180,650
  191,480
  202,768
  214,541
  226,824
Debt-to-equity ratio
  1.073
  1.140
  1.200
  1.250
  1.280
  1.310
  1.330
  1.350
  1.370
  1.380
  1.390
  1.400
  1.410
  1.420
  1.430
  1.430
  1.440
  1.440
  1.450
  1.450
  1.450
  1.460
  1.460
  1.460
  1.460
  1.470
  1.470
  1.470
  1.470
  1.470
  1.470
Adjusted equity ratio
  0.371
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  659
  936
  1,217
  1,526
  1,863
  2,227
  2,617
  3,033
  3,475
  3,941
  4,431
  5,577
  6,115
  6,676
  7,262
  7,871
  8,505
  9,164
  9,849
  10,561
  11,301
  12,070
  12,869
  13,700
  14,565
  15,466
  16,403
  17,380
  18,399
  19,461
  20,569
Depreciation, amort., depletion, $m
  240
  994
  1,018
  1,045
  1,074
  1,106
  1,140
  1,176
  1,214
  1,255
  1,298
  478
  525
  574
  625
  679
  734
  792
  852
  914
  978
  1,046
  1,116
  1,188
  1,264
  1,343
  1,425
  1,510
  1,599
  1,692
  1,789
Funds from operations, $m
  944
  1,930
  2,235
  2,571
  2,937
  3,332
  3,757
  4,209
  4,689
  5,196
  5,729
  6,055
  6,640
  7,250
  7,887
  8,550
  9,239
  9,956
  10,701
  11,475
  12,279
  13,116
  13,985
  14,889
  15,829
  16,808
  17,828
  18,890
  19,998
  21,153
  22,358
Change in working capital, $m
  -20
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
Cash from operations, $m
  964
  1,935
  2,240
  2,577
  2,943
  3,339
  3,764
  4,217
  4,697
  5,204
  5,738
  6,064
  6,650
  7,261
  7,898
  8,561
  9,251
  9,968
  10,714
  11,488
  12,293
  13,130
  14,000
  14,904
  15,845
  16,825
  17,845
  18,909
  20,017
  21,173
  22,379
Maintenance CAPEX, $m
  0
  -107
  -129
  -153
  -180
  -209
  -241
  -275
  -311
  -350
  -390
  -433
  -478
  -525
  -574
  -625
  -679
  -734
  -792
  -852
  -914
  -978
  -1,046
  -1,116
  -1,188
  -1,264
  -1,343
  -1,425
  -1,510
  -1,599
  -1,692
New CAPEX, $m
  -40
  -654
  -730
  -804
  -877
  -948
  -1,019
  -1,087
  -1,154
  -1,220
  -1,284
  -1,347
  -1,410
  -1,472
  -1,535
  -1,599
  -1,663
  -1,729
  -1,797
  -1,868
  -1,941
  -2,017
  -2,097
  -2,181
  -2,269
  -2,362
  -2,459
  -2,562
  -2,671
  -2,785
  -2,906
Cash from investing activities, $m
  -3,753
  -761
  -859
  -957
  -1,057
  -1,157
  -1,260
  -1,362
  -1,465
  -1,570
  -1,674
  -1,780
  -1,888
  -1,997
  -2,109
  -2,224
  -2,342
  -2,463
  -2,589
  -2,720
  -2,855
  -2,995
  -3,143
  -3,297
  -3,457
  -3,626
  -3,802
  -3,987
  -4,181
  -4,384
  -4,598
Free cash flow, $m
  -2,789
  1,173
  1,382
  1,620
  1,886
  2,181
  2,504
  2,855
  3,232
  3,635
  4,064
  4,284
  4,762
  5,263
  5,789
  6,337
  6,909
  7,505
  8,125
  8,769
  9,438
  10,134
  10,857
  11,608
  12,388
  13,199
  14,043
  14,922
  15,836
  16,788
  17,780
Issuance/(repayment) of debt, $m
  2,932
  1,678
  1,851
  2,038
  2,223
  2,405
  2,583
  2,757
  2,927
  3,093
  3,256
  3,417
  3,576
  3,734
  3,893
  4,054
  4,218
  4,386
  4,558
  4,737
  4,922
  5,116
  5,319
  5,531
  5,754
  5,989
  6,237
  6,498
  6,773
  7,064
  7,370
Issuance/(repurchase) of shares, $m
  3
  173
  17
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,926
  1,851
  1,868
  2,038
  2,223
  2,405
  2,583
  2,757
  2,927
  3,093
  3,256
  3,417
  3,576
  3,734
  3,893
  4,054
  4,218
  4,386
  4,558
  4,737
  4,922
  5,116
  5,319
  5,531
  5,754
  5,989
  6,237
  6,498
  6,773
  7,064
  7,370
Total cash flow (excl. dividends), $m
  100
  3,024
  3,249
  3,658
  4,110
  4,587
  5,088
  5,612
  6,159
  6,728
  7,320
  7,701
  8,337
  8,998
  9,682
  10,391
  11,127
  11,890
  12,683
  13,506
  14,361
  15,250
  16,175
  17,139
  18,142
  19,189
  20,280
  21,420
  22,609
  23,852
  25,150
Retained Cash Flow (-), $m
  -490
  -1,109
  -1,234
  -1,359
  -1,482
  -1,604
  -1,722
  -1,838
  -1,951
  -2,062
  -2,171
  -2,278
  -2,384
  -2,489
  -2,596
  -2,703
  -2,812
  -2,924
  -3,039
  -3,158
  -3,282
  -3,411
  -3,546
  -3,687
  -3,836
  -3,993
  -4,158
  -4,332
  -4,515
  -4,709
  -4,913
Prev. year cash balance distribution, $m
 
  356
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,271
  2,015
  2,299
  2,628
  2,983
  3,365
  3,774
  4,208
  4,666
  5,149
  5,423
  5,954
  6,508
  7,086
  7,689
  8,315
  8,967
  9,644
  10,348
  11,079
  11,839
  12,630
  13,451
  14,306
  15,196
  16,122
  17,088
  18,094
  19,143
  20,237
Discount rate, %
 
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
 
  2,107
  1,722
  1,795
  1,859
  1,897
  1,904
  1,882
  1,829
  1,748
  1,643
  1,455
  1,325
  1,184
  1,038
  892
  751
  619
  499
  394
  303
  228
  167
  119
  83
  56
  36
  23
  14
  8
  5
Current shareholders' claim on cash, %
  100
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2

Roper Technologies, Inc. designs and develops software, and engineered products and solutions. It operates in four segments: Medical & Scientific Imaging; RF Technology; Industrial Technology; and Energy Systems & Controls. The company offers diagnostic and laboratory software solutions; patient positioning devices and related software, 3-D measurement technology, and diagnostic and therapeutic disposable products; non-invasive instruments and video laryngoscopes; and a cloud-based financial analytics and performance software platform, as well as electron filters, charged couple devices, and complementary metal oxide semiconductor cameras, detectors, and related software. It also offers radio frequency identification communication technology and software solutions that are used primarily in toll and traffic systems, security and access controls, campus card systems, card readers, software-as-a-service, and metering and remote monitoring applications, as well as management software for legal and construction firms. In addition, the company offers fluid handling pumps, materials analysis equipment and consumables, leak testing equipment, flow measurement and metering equipment, and water meter and automatic meter reading products and systems. Further, it provides control systems, fluid properties testing equipment, industrial valves and controls, vibration sensors and controls, and non-destructive inspection and measurement products and solutions. Additionally, the company provides enterprise software and information solutions for government contractors, professional services firms, and other project-based businesses. It serves healthcare, transportation, commercial construction, food, energy, water, education, and academic research markets in the United States and internationally. The company was formerly known as Roper Industries, Inc. and changed its name to Roper Technologies, Inc. in April 2015. The company was founded in 1981 and is based in Sarasota, Florida.

FINANCIAL RATIOS  of  Roper Technologies (ROP)

Valuation Ratios
P/E Ratio 36
Price to Sales 6.3
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 24.6
Price to Free Cash Flow 25.6
Growth Rates
Sales Growth Rate 5.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 11.1%
Cap. Spend. - 3 Yr. Gr. Rate -1.4%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 100.3%
Total Debt to Equity 107.3%
Interest Coverage 10
Management Effectiveness
Return On Assets 6%
Ret/ On Assets - 3 Yr. Avg. 7.5%
Return On Total Capital 6.4%
Ret/ On T. Cap. - 3 Yr. Avg. 8.3%
Return On Equity 11.9%
Return On Equity - 3 Yr. Avg. 13.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 61.5%
Gross Margin - 3 Yr. Avg. 60.4%
EBITDA Margin 33.9%
EBITDA Margin - 3 Yr. Avg. 34.5%
Operating Margin 27.8%
Oper. Margin - 3 Yr. Avg. 28.2%
Pre-Tax Margin 24.8%
Pre-Tax Margin - 3 Yr. Avg. 26.3%
Net Profit Margin 17.4%
Net Profit Margin - 3 Yr. Avg. 18.3%
Effective Tax Rate 30%
Eff/ Tax Rate - 3 Yr. Avg. 30.1%
Payout Ratio 18.4%

ROP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ROP stock intrinsic value calculation we used $3790 million for the last fiscal year's total revenue generated by Roper Technologies. The default revenue input number comes from 2016 income statement of Roper Technologies. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ROP stock valuation model: a) initial revenue growth rate of 20.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.8%, whose default value for ROP is calculated based on our internal credit rating of Roper Technologies, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Roper Technologies.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ROP stock the variable cost ratio is equal to 71.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ROP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Roper Technologies.

Corporate tax rate of 27% is the nominal tax rate for Roper Technologies. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ROP stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ROP are equal to 84.8%.

Life of production assets of 43.5 years is the average useful life of capital assets used in Roper Technologies operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ROP is equal to -0.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $5789 million for Roper Technologies - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 101.052 million for Roper Technologies is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Roper Technologies at the current share price and the inputted number of shares is $23.6 billion.

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COMPANY NEWS

▶ Roper Technologies Continues Its Transformation   [Aug-01-17 06:54PM  Motley Fool]
▶ Roper Technologies tops 2Q profit forecasts   [Jul-31-17 10:08PM  Associated Press]
▶ Roper Technologies tops 2Q profit forecasts   [07:04AM  Associated Press]
▶ Pity This Industrial CEO's Successor   [10:31AM  Bloomberg]
▶ DAT Solutions Names New Product VP   [Jun-29-17 12:11PM  GlobeNewswire]
▶ 5 Companies Reach 52-Week Highs   [Jun-21-17 01:14PM  GuruFocus.com]
▶ Roper Technologies Announces Dividend   [Jun-12-17 10:30AM  GlobeNewswire]
▶ Roper Technologies To Present At Stifel Investor Conference   [Jun-08-17 11:30AM  GlobeNewswire]
▶ Five Tampa Bay companies make the new Fortune 500 list   [Jun-07-17 02:30PM  American City Business Journals]
▶ The highest-paid CEOs by state   [May-25-17 06:35AM  Associated Press]
▶ Roper Technologies Upgrades Guidance   [May-05-17 11:02AM  Motley Fool]
▶ A Bet On Niche Manufacturing   [May-02-17 06:35AM  Forbes]
▶ Roper Technologies tops 1Q profit forecasts   [07:12AM  Associated Press]
▶ Here are Tampa Bays top performing stocks in Q1 2017   [Apr-03-17 08:33AM  at bizjournals.com]
▶ Here are Tampa Bays top performing stocks in Q1 2017   [08:33AM  American City Business Journals]
▶ Roper Technologies Announces Dividend   [Mar-14-17 09:00AM  GlobeNewswire]
▶ Raymond James moves into benchmark stock index   [08:05AM  at bizjournals.com]
▶ Roper Technologies Announces Senior Executive Appointments   [Mar-10-17 06:55AM  GlobeNewswire]
▶ UMs Florida stock index bests S&P 500   [08:00AM  at bizjournals.com]
Stock chart of ROP Financial statements of ROP
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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