Key Stats for ROP Stock
- Past-6-Month Performance: -38%
- 52-Week Range: $313 to $595
- Valuation Model Target Price: $403
- Implied Upside: 20%
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What Happened?
Roper Technologies stock has fallen about 38% over the last six months, recently trading near $336 per share as investors reassessed growth expectations and valuation multiples across high-quality software and industrial technology companies.
The decline reflects a reset in premium valuations rather than a collapse in earnings performance.
Shares moved lower primarily because Q4 organic growth slowed to 4%, driven by weaker Deltek government contracting activity and lower nonrecurring revenue, while management guided for only 5% to 6% organic growth in 2026.
That outlook signaled stabilization instead of reacceleration, prompting investors to compress the earnings multiple after Roper had previously traded at a premium valuation.
In its latest quarterly update, Roper reported Q4 revenue of $2.06 billion, up 10%, with adjusted EPS of $5.21 above guidance of $5.11 to $5.16. Full-year 2025 revenue reached $7.9 billion, up 12%, and free cash flow totaled nearly $2.5 billion.
CEO Neil Hunn said the company delivered “solid execution in 2025,” highlighting low double-digit enterprise software bookings growth and expanding EBITDA margins, even as Deltek’s GovCon market remained pressured.
Institutional positioning remains active despite the share price decline. Vanguard increased its stake 1.8% in Q3 to 11,092,444 shares, JPMorgan boosted its position 62.5% to 1,585,732 shares, and Principal Financial Group raised its stake 2.2% to 2,553,409 shares valued at roughly $1.27 billion.
Public Sector Pension Investment Board increased its position 425.6%, while ING Groep NV lifted its stake 175.7%. At the same time, ProShare Advisors trimmed its stake 3.5% and Renaissance Group reduced its position 94.5%.
Overall institutional ownership stands near 93.31%, signaling sustained long-term sponsorship even as shares repriced lower.
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Is ROP Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 7.8%
- Operating Margins: 29.3%
- Exit P/E Multiple: 18x
Revenue growth is anchored in highly recurring vertical software businesses embedded in mission-critical workflows across healthcare, legal, freight, and government markets.
Enterprise software bookings grew in the low double digits in 2025, supporting steady recurring expansion even as macro conditions remain uneven.
Management’s 2026 guidance of 5% to 6% organic growth reflects conservative assumptions that exclude recovery in Deltek GovCon or DAT’s freight market.
If those end markets stabilize, incremental revenue could translate efficiently into earnings given Roper’s asset-light structure and pricing discipline.
Margin durability remains a defining feature. EBITDA margins expanded in Q4, and incremental software revenue carries attractive contribution margins.
SaaS migration, cross-selling across vertical platforms, and cost discipline support continued operating leverage in 2026.
AI commercialization adds another lever. Management is accelerating embedded AI capabilities across 21 software businesses, focused on workflow automation and marketplace efficiency that deepen customer value and expand monetization. Guidance does not assume meaningful AI uplift, leaving room for upside as adoption scales.
Roper enters 2026 with over $6 billion of capital deployment capacity after deploying $3.3 billion into vertical software acquisitions in 2025 and repurchasing $500 million of stock in Q4.
That flexibility supports disciplined acquisitions and opportunistic buybacks to enhance per-share cash flow growth.
Based on these inputs, the model estimates a target price of $403, implying about 20% total upside and approximately 6.6% annualized returns, indicating the stock appears undervalued at current prices.
At current levels, Roper appears modestly undervalued, with 2026 performance driven by recurring revenue durability, margin expansion, embedded AI monetization, and disciplined capital allocation.
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