Roper Technologies (NYSE 🙂 announced Friday a huge sale in transportation technologies company Roper Technology.

Although the move allowed for more capital to be used by the company, it reduced one of its key points. While the additional capital is a welcome development, some may find it too much to handle. Roper Technologies is a company I am slightly optimistic about.

Roper Technologies experienced a difficult start to this year. The company spent the first two months of the year in general decline. The company recovered from its slide and has now exceeded its 2021 starting point by quite a large margin.

After opening the year at $419.55 closing price, the company fell to $356.23 in March. However, expansion was underway and on July 23, the company reached $499.21, its highest point for the year.

It was unsustainable and began a gradual slide since then. (See stock charts of Roper Technologies on TipRanks).

Roper Technologies’ latest move on Friday was a planned sale. Roper’s TransCore business will be sold to Singapore Technologies Engineering, (SGGKF), in an all-cash deal worth $2.7billion. That cash can be used to make other acquisitions.

Roper’s TransCore operations focuses mainly on “intelligent transportation systems,” which include items like traffic management and toll-related systems.

Wall Street Take

Wall Street consensus assessment calls Roper Technologies moderate buy based on 7 Buy ratings, 1 Hold rating and 1 Sell rating. Roper Technologies’ average price target is $522.33, which implies an upside potential of 16.8%

It’s all a matter of timing?

Roper Technologies sees it as a good idea to get rid of TransCore. TransCore’s focus is on specific parts of the infrastructure linked to cities. Roper, on the other hand, has a broader focus than smart city infrastructure. The company’s strategy suggests it will not be in the smart city market, at the least, in America, because it isn’t a priority.

TransCore’s demise is actually in line with Roper’s strategic point Strategic Reinvestment of Cash. Also, Roper is focused on “Significant Growth Platforms,” and smart cities have been a much bigger deal elsewhere.

Roper Technologies’ third quarter financial results will be released on October 22nd, some might argue. An unexpected multi-billion-dollar cash injection might be able to help stabilize a weak result elsewhere.

But there is a problem. Roper made the announcement on October 3rd. Roper reported its third quarter results on October 3. But there may be a connection somewhere else. On September 17, the company declared a $0.5625 dividend per share. Roper has maintained its dividend well over the years. It announced in September 2017 its 25th consecutive dividend increase.

The most pressing issue is still to be resolved. Why would an American company sell a portion of its infrastructure operation when the Biden administration is on fire for it?

This would appear to be a good time for infrastructure investments, as it has access to some government money. Perhaps Roper saw the intense budget wrangling that came with the potential — and narrowly averted at last report — government shutdown. It might have realized that its chances of being included in the deal are slim.

Concluding views

It’s unclear why Roper Technologies would choose to get rid of an infrastructure-focused operation when the current political climate is calling for infrastructure building. Of course, there are many possible reasons. Roper has many reasons for these.

Roper’s annual dividend is a good indicator of financial health. It should also be noted that its infrastructure-focused strategy will continue to serve Roper well in the future.

Although there is uncertainty surrounding the sale, as well as the price at which it traded, this is a company with a great deal of potential for growth.

Disclosure: Steve Anderson didn’t hold any positions in the securities listed in this article at the time it was published.

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