What happened

Roper Technologies (NYSE:ROP) reported fiscal Q1 2020 earnings this morning, sending its shares 13% higher in early trading. As of 10:45 a.m. EDT, the industrial automation software maker's stock remains up a healthy 6.2%.

Roper reported adjusted profits of $3.05 per diluted share, ahead of analysts' expected $2.91. Sales for the quarter likewise exceeded expectations -- $1.35 billion versus the $1.3 billion that analysts had predicted.  

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So what

As calculated using generally accepted accounting principles (GAAP), however, Roper earned $2.28 per share, significantly less than its adjusted number and down more than 35% year over year. Roper's sales, however, were up 5%.  

Why did greater sales yield lower profits? Higher operating costs is one answer. "Selling, general and administrative expenses" climbed nearly twice as fast in Q1 as did the sales they supported. But also, Roper's prior-year first quarter included a big gain on the sale of its Scientific Imaging businesses -- $120 million -- that was absent in Q1 2020. Hence, the decline in earnings wasn't nearly as bad as it looked at first glance.

Now what

Speaking directly to the COVID-19 crisis, CEO Neil Hunn noted that "all of our businesses with manufacturing facilities have been deemed essential and remain operational, supplying our customers with vital and necessary products." Hunn reassured his shareholders that "we are highly confident in our ability to successfully navigate the situation." 

Updating guidance to incorporate the effects of the novel coronavirus pandemic, Roper said it now expects to earn between $2.50 and $2.70 per diluted share in Q2, and between $11.60 and $12.60 for the full year, using GAAP figures. Those are good, profitable numbers to see in the midst of a recession.

Unfortunately, they still work out to a full-year P/E of about 27.6 on Roper stock, which is probably too much to pay for a company with declining earnings this year -- even if those earnings are falling through no fault of Roper's own, and even if management is confident in its "ability to successfully navigate the situation."