Roper Technologies (NASDAQ:ROP) isn’t the S&P 500’s most well-known tech company. But I can’t stop buying it – at least, for the time being.
It’s a growing business whose shares trade at a low valuation. And in the last month, the case has become even stronger.
Overview
Roper’s a collection of specialist software businesses whose subsidiaries focus on areas such as government contracting, freight matching, and legal practices.
I started buying the stock at $345, with the firm expecting to make $21.30 in earnings per share (EPS) this year. But things have improved since then. In its latest update, management reported 11% revenue growth. Furthermore, it increased its EPS forecast to $21.80 for 2026.
The share price has gone up in line with the higher guidance. So it’s still trading at a price-to-earnings (P/E) multiple of around 16. So we have a company growing sales at 11% and trading at a P/E of 16. I think that’s cheap, which is why I’ve been buying.
Why so cheap?
However, Roper’s shares have been falling, and for a few reasons. The biggest however, is the threat of artificial intelligence (AI), which investors just can’t ignore.
That’s been weighing on the industry as a whole. I think Roper’s focus on specialised products is likely to make it more resilient than most, but I could be wrong. And new technology has a habit of upending previously strong businesses such as Roper with little warning.
AI will almost certainly lower barriers to entry, encouraging customers to switch or build their own products. That said, it won’t be straightforward.
In some cases, there are regulatory or compliance issues to get past. But even where there aren’t, I think specialist products have an advantage.
Generic software might not be ideal for the individual needs of a particular industry. And that could leave the door open for a better solution.
With something designed specifically for a given industry though, that’s harder to imagine. So I think Roper’s businesses are likely to be unusually resilient.
Capital allocation
Another reason Roper shares have been falling recently is capital allocation. The firm’s collection of subsidiaries have come about through acquisitions.
Source: Company Website
This brings a risk of overpaying for deals. And the company paid some high multiples for Frontline Education in 2022 and Procare Solutions in 2024.
Recently though, things have changed. As its share price has fallen, Roper’s shifted away from acquisitions to buying its own stock.
In the first three months of 2026, the firm reported $1.5bn in share buybacks. That’s around 4% of the current market value.
I think management deserves a lot of credit for the adjustment. And adding that to the 11% revenue growth makes the case even more compelling.
AI?
AI remains the big unanswered question for software companies. That includes – but isn’t limited to – Roper Technologies. There’s nothing the firm could have said in its latest update to convince investors fully of its resilience. But the report looks very strong to me.
Historically, the chance to buy this stock at this valuation doesn’t come around often. So I’m trying to make the most of it while I can.
