Roper Technologies, Inc.ROPNASDAQ
Loading
DCF Valuation
DCF Valuation Summary
Buy
Fair Value: $458.37 per share(market-calibrated)
+25.4%
Upside to Fair Value
Current
$365.46
Pure Model
$471.87
Fair Value
$458.37
Bull Case
$591.46
Bear Case
$371.26
Market Reality Check
Model Terminal Growth
2.25%
Market-Implied Growth
0.52%
Calibrated Growth
1.82%
Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $471.87.
What's Driving This Ratingfor ROP
✓
CapEx already efficient
CapEx at 0.90% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.
✓
Premium margins already priced in
EBIT margin of 28.95% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.
⚠
Analyst growth decelerates sharply
Revenue growth drops from 7.79% in Year 1 to 2.25% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.
🎯
Market pricing in lower growth than model
The market implies only 0.52% perpetual growth — 173bps below the model's 2.25%. This suggests the market sees headwinds or risks not in the model.
✓
Strong cash flow conversion
Year 10 FCF/EBITDA conversion of 81.52% indicates efficient cash generation. FCF reaches $3.7B by Year 10 (31.30% FCF margin).
Weighted Average Cost of Capital (WACC)
Cost of Equity (CAPM)
Risk-Free Rate (Rf)4.50%
Beta (β)0.93
Market Risk Premium4.50%
*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)
Cost of Equity (Re)8.69%
Cost of Debt
Pre-tax Cost of Debt2.53%
Tax Rate20.65%
After-tax Cost of Debt2.01%
Equity Weight (E/V)80.81%
Debt Weight (D/V)19.19%
WACC Calculation
WACC = (E/V × Re) + (D/V × Rd × (1-Tc))
WACC = (80.81% × 8.69%) + (19.19% × 2.01%)
= 7.40%
10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)
| Year | Year 1 | Year 3 | Year 5 | Year 7 | Year 10 |
|---|---|---|---|---|---|
| Revenue | $8.5B | $9.8B | $10.5B | $11.0B | $11.7B |
| EBIT | $2.5B | $2.8B | $3.0B | $3.2B | $3.4B |
| Tax | $509M | $584M | $627M | $656M | $701M |
| NOPAT | $2.0B | $2.2B | $2.4B | $2.5B | $2.7B |
| + Depreciation | $805M | $923M | $991M | $1.0B | $1.1B |
| - Capex | $76M | $88M | $94M | $98M | $105M |
| - Δ NWC | $62M | $71M | $23M | $24M | $26M |
| Free Cash Flow | $2.6B | $3.0B | $3.3B | $3.4B | $3.7B |
| Discount Factor | 0.931 | 0.807 | 0.700 | 0.607 | 0.490 |
| Present Value | $2.4B | $2.4B | $2.3B | $2.1B | $1.8B |
FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital
Terminal Value Calculation
Perpetuity Growth Method
Year 10 FCF$3.7B
Terminal Growth Rate2.25%
WACC7.40%
TV = FCF₁₀ × (1+g) / (WACC-g)
Terminal Value$72.8B
PV of Terminal Value$35.6B
Exit Multiple Method
Year 10 EBITDA$4.5B
Exit Multiple (EV/EBITDA)18.0x
TV = EBITDA₁₀ × Exit Multiple
Terminal Value$81.0B
PV of Terminal Value$39.7B
Valuation Summary
Perpetuity Growth Method
PV of Projected FCFs$21.9B
PV of Terminal Value$35.6B
Enterprise Value$57.6B
(-) Net Debt$9.0B
Equity Value$48.6B
Shares Outstanding107M
Price per Share$453.10
Exit Multiple Method
PV of Projected FCFs$21.9B
PV of Terminal Value$39.7B
Enterprise Value$61.6B
(-) Net Debt$9.0B
Equity Value$52.6B
Shares Outstanding107M
Price per Share$490.63
Pure Model Fair Value
$471.87
Average of perpetuity growth and exit multiple methods (before market calibration)
Sensitivity AnalysisPrice per Share
| WACC ↓ / Growth → | 1.25% | 1.75% | 2.25% | 2.75% | 3.25% |
|---|---|---|---|---|---|
| 5.40% | $611.74 | $646.86 | $693.12 | $756.82 | $850.09 |
| 6.40% | $514.81 | $535.23 | $560.56 | $592.82 | $635.31 |
| 7.40% | $443.48 | $456.42 | $471.87 | $490.63 | $513.92 |
| 8.40% | $387.76 | $396.46 | $406.57 | $418.48 | $432.69 |
| 9.40% | $342.47 | $348.58 | $355.54 | $363.55 | $372.86 |
How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.
Scenario Analysis
Bear Case
$371.26
1.6% vs current
- • -25% vs analyst consensus
- • Terminal growth: 2.0%
- • Beta: 1.16
Base Case
$471.87
29.1% vs current
- • Analyst consensus
- • Terminal growth: 2.3%
- • Beta: 0.93
Bull Case
$591.46
61.8% vs current
- • +25% vs analyst consensus
- • Terminal growth: 2.8%
- • Beta: 0.79
Key Assumptions & Drivers• Industrials Sector
Growth Assumptions (Select Years)
Year 1 Revenue Growth7.79%
Year 3 Revenue Growth7.78%
Year 5 Revenue Growth2.25%
Year 7 Revenue Growth2.25%
Year 10 Revenue Growth2.25%
Terminal Growth Rate2.25%
Margin & Efficiency
Current EBIT Margin28.95%
Tax Rate20.65%
Historical Capex / Rev0.90%
NWC / Revenue10.00%
Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.
Institutional-Grade Methodology
Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta
Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)
This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.