DCF Studio

    ROP · NMS · Technology

    Roper Technologies, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 429.84

    Market price

    USD 372.74

    Implied upside

    +15.3%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 429.84+15.3%
    Exit multiple
    USD 630.72+69.2%
    Market price
    USD 372.74

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn3bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 9.0bnUSD 10.2bnUSD 11.6bnUSD 13.2bnUSD 15.0bn+13.7%
    EBITUSD 2.5bnUSD 2.9bnUSD 3.3bnUSD 3.7bnUSD 4.3bn+13.7%
    NOPATUSD 2.0bnUSD 2.3bnUSD 2.6bnUSD 3.0bnUSD 3.4bn+13.7%
    Add depreciation & amortisationUSD 1.1bnUSD 1.2bnUSD 1.4bnUSD 1.6bnUSD 1.8bn+13.7%
    Less capital expenditureUSD -133.9mUSD -152.3mUSD -173.2mUSD -197.0mUSD -224.0m+13.7%
    Less increase in working capitalUSD 57.2mUSD 65.1mUSD 74.0mUSD 84.2mUSD 95.7m-13.7%
    Free cashflow to firmUSD 3.0bnUSD 3.4bnUSD 3.9bnUSD 4.4bnUSD 5.0bn+13.7%
    Discount factor0.96030.88570.81680.75330.6948-
    Present valueUSD 2.9bnUSD 3.0bnUSD 3.2bnUSD 3.3bnUSD 3.5bn+4.9%
    Present Value Of The ForecastUSD 15.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.830Reported 0.747, pulled toward 1.0 (Blume)
    Cost of equity9.57%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 36.9bn79.8% of capital
    Total debtUSD 9.3bn20.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.43%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 429.84

    71% of EV

    Forecast FCFF, final year
    USD 5.0bn
    Capex at depreciation, working capital in reinvestment
    USD 4.7bn
    Less reinvestment at g/ROIC (29.7% of NOPAT)
    USD -1.4bn
    Capitalised
    USD 3.3bn
    ROIC (WACC floor)
    8.4%
    Terminal value, undiscounted
    USD 57.1bn
    Terminal value, discounted
    USD 39.7bn
    Enterprise value
    USD 55.6bn
    Less net debt
    USD 9.1bn
    Equity value
    USD 46.5bn

    Exit at 14.7x EBITDA

    Value per shareUSD 630.72

    79% of EV

    Terminal value, undiscounted
    USD 88.4bn
    Terminal value, discounted
    USD 61.4bn
    Enterprise value
    USD 77.3bn
    Less net debt
    USD 9.1bn
    Equity value
    USD 68.2bn

    Spread between methods: 38%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.43%588.22590.78593.33595.88598.43
    7.43%496.30498.42500.53502.65504.77
    8.43%426.26428.05429.84431.63433.42
    9.43%371.15372.68374.22375.75377.29
    10.43%326.66327.99329.32330.66331.99

    Outlined: this model. Green text: above today's price of 372.74. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year13.7%10.8%-3.0pp
    EBIT margin28.3%23.8%-4.5pp
    Discount rate8.4%9.5%+1.0pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.