Stock Analysis on Net
Stock Analysis on Net

Roper Technologies Inc. (NASDAQ:ROP)

This company has been moved to the archive! The financial data has not been updated since November 2, 2023.

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Roper Technologies Inc., free cash flow to the firm (FCFF) forecast

US$ in thousands, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 16.42%
01 FCFF0 695,099
1 FCFF1 731,597 = 695,099 × (1 + 5.25%) 628,398
2 FCFF2 787,956 = 731,597 × (1 + 7.70%) 581,336
3 FCFF3 867,982 = 787,956 × (1 + 10.16%) 550,046
4 FCFF4 977,425 = 867,982 × (1 + 12.61%) 532,027
5 FCFF5 1,124,640 = 977,425 × (1 + 15.06%) 525,807
5 Terminal value (TV5) 95,072,429 = 1,124,640 × (1 + 15.06%) ÷ (16.42% – 15.06%) 44,449,594
Intrinsic value of Roper Technologies Inc. capital 47,267,208
Less: Long-term debt, including current portion (fair value) 5,985,300
Intrinsic value of Roper Technologies Inc. common stock 41,281,908
 
Intrinsic value of Roper Technologies Inc. common stock (per share) $386.45
Current share price $494.05

Based on: 10-K (reporting date: 2022-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

Roper Technologies Inc., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value) 52,775,467 0.90 18.05%
Long-term debt, including current portion (fair value) 5,985,300 0.10 2.06% = 2.63% × (1 – 21.82%)

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in thousands

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 106,822,117 × $494.05
= $52,775,466,903.85

   Long-term debt, including current portion (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (23.10% + 22.70% + 21.50% + 20.60% + 21.20%) ÷ 5
= 21.82%

WACC = 16.42%

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Roper Technologies Inc., PRAT model

Microsoft Excel
Average Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in thousands)
Interest expense, net 192,400 234,100 218,900 186,600 182,100
Net earnings from discontinued operations 3,559,100 170,000 — — —
Net earnings 4,544,700 1,152,600 949,700 1,767,900 944,400
 
Effective income tax rate (EITR)1 23.10% 22.70% 21.50% 20.60% 21.20%
 
Interest expense, net, after tax2 147,956 180,959 171,837 148,160 143,495
Add: Dividends declared 269,600 243,200 219,800 197,600 175,600
Interest expense (after tax) and dividends 417,556 424,159 391,637 345,760 319,095
 
EBIT(1 – EITR)3 1,133,556 1,163,559 1,121,537 1,916,060 1,087,895
 
Current portion of long-term debt, net 699,200 799,200 502,000 602,200 1,500
Long-term debt, net of current portion 5,962,500 7,122,600 9,064,500 4,673,100 4,940,200
Stockholders’ equity 16,037,800 11,563,800 10,479,800 9,491,900 7,738,500
Total capital 22,699,500 19,485,600 20,046,300 14,767,200 12,680,200
Financial Ratios
Retention rate (RR)4 0.63 0.64 0.65 0.82 0.71
Return on invested capital (ROIC)5 4.99% 5.97% 5.59% 12.98% 8.58%
Averages
RR 0.69
ROIC 7.62%
 
FCFF growth rate (g)6 5.25%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 See details »

2022 Calculations

2 Interest expense, net, after tax = Interest expense, net × (1 – EITR)
= 192,400 × (1 – 23.10%)
= 147,956

3 EBIT(1 – EITR) = Net earnings – Net earnings from discontinued operations + Interest expense, net, after tax
= 4,544,700 – 3,559,100 + 147,956
= 1,133,556

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [1,133,556 – 417,556] ÷ 1,133,556
= 0.63

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 1,133,556 ÷ 22,699,500
= 4.99%

6 g = RR × ROIC
= 0.69 × 7.62%
= 5.25%

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (58,760,767 × 16.42% – 695,099) ÷ (58,760,767 + 695,099)
= 15.06%

where:

Total capital, fair value0 = current fair value of Roper Technologies Inc. debt and equity (US$ in thousands)
FCFF0 = the last year Roper Technologies Inc. free cash flow to the firm (US$ in thousands)
WACC = weighted average cost of Roper Technologies Inc. capital

FCFF growth rate (g) forecast

Roper Technologies Inc., H-model

Microsoft Excel
Year Value gt
1 g1 5.25%
2 g2 7.70%
3 g3 10.16%
4 g4 12.61%
5 and thereafter g5 15.06%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpolation between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 5.25% + (15.06% – 5.25%) × (2 – 1) ÷ (5 – 1)
= 7.70%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 5.25% + (15.06% – 5.25%) × (3 – 1) ÷ (5 – 1)
= 10.16%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 5.25% + (15.06% – 5.25%) × (4 – 1) ÷ (5 – 1)
= 12.61%