The industrial tech sector stands at a critical juncture, poised to redefine how industries operate and innovate. As automation and smart technologies become deeply embedded in manufacturing and operations, the sector is driving global economic transformation.

With the global industrial equipment market expected to reach $347.4 billion by 2031, growing at a CAGR of 4.2%, the industry is benefiting from a surge in manufacturing activities, the rise of Industry 4.0, and the widespread adoption of automation technologies like artificial intelligence (AI) and robotics. Meanwhile, the industrial machinery market, valued at $693.70 billion in 2023, is expected to expand at a 7.5% CAGR through 2032.

Moreover, while AI fueled significant gains for semiconductor and tech giants in 2024, experts like Abound Financial CIO David Laut anticipate industrials will take center stage in 2025, leveraging AI to transform workflows and optimize processes.

Against this backdrop, let’s compare two industrial tech stocks, Roper Technologies, Inc. (ROP) and ESCO Technologies Inc. (ESE), to determine which one holds more promise.

The Case for Roper Technologies, Inc. Stock

Valued at $54.51 billion by market cap, Roper Technologies, Inc. (ROP) designs and develops software and technology-enabled products and solutions. It operates through three segments: Application Software; Network Software; and Technology Enabled Products.

ROP’s stock has declined 7.4% over the past month and 3.5% over the past year to close the last trading session at $510.30.

In terms of the trailing-12-month ROP’s gross profit margin of 69.68% is 37.8% higher than the 50.58% industry average. However, its trailing-12-month asset turnover ratio of 0.23x is 63.2% lower than the industry average of 0.62x.

ROP’s net revenues for the third quarter that ended September 30, 2024, increased 12.9% year-over-year to $1.76 billion. Its income from operations grew 11.3% from the year-ago value to $496.60 million. The company’s net earnings came in at $367.90 million or $3.40 per share, indicating an increase of 6% and 5.3%, respectively, from the prior year’s quarter.

Street expects ROP’s revenue for the quarter ended December 2024 to increase 13.9% year-over-year to $1.84 billion. The company’s EPS for the same quarter is expected to gain 8.6% year-over-year to $4.75. Moreover, the company surpassed the consensus EPS estimates in each of the trailing four quarters.

ROP’s POWR Ratings reflect mixed prospects. It has an overall rating of C, which translates to Neutral in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

ROP is ranked #62 out of 78 stocks in the A-rated Industrial – Machinery industry. It has a C grade for Growth, Value, Momentum, and Quality. To see ROP’s Stability and Sentiment ratings, click here.

The Case for ESCO Technologies Inc. Stock

Valued at $3.41 billion by market cap, ESCO Technologies Inc. (ESE) produces and supplies engineered products and systems for industrial and commercial markets worldwide. It operates through three segments: Aerospace & Defense; Utility Solutions Group; and RF Test & Measurement.

Shares of ESE have surged 28.5% over the past six months and 27.3% over the past year to close the last trading session at $131.46.

In terms of the trailing-12-month EBITDA margin, ESE’s 19.73% is 40.8% higher than the 14.01% industry average. Likewise, its 9.92% trailing-12-month net income margin is 52.1% higher than the industry average of 6.52%.

ESE’s net sales for the fiscal fourth quarter that ended on September 30, 2024, increased 9.5% year-over-year to $298.53 million. Its EBIT rose 6.9% from the year-ago value to $44.04 million. The company’s net earnings came in at $34.26 million, up 7.1% year-over-year, and its adjusted EPS rose 16.8% from the prior-year quarter to $1.46.

Analysts expect ESE’s revenue for the first quarter (ended December 2024) to increase 10.1% year-over-year to $240.40 million, while its EPS for the same period is expected to grow 17.3% from the prior year to $0.73.

ESE’s bright prospects are reflected in its POWR Ratings. The stock has an overall B rating, translating to a Buy in our proprietary rating system.

It also has a B grade for Growth, Momentum, and Sentiment. Out of 89 stocks in the Industrial – Equipment industry, it is ranked #30. Click here for the additional POWR Ratings for ESE (Value, Stability, and Quality).

ESCO Technologies vs. Roper Technologies: Which Industrial Tech Stock Holds More Promise?

The industrial industry is experiencing robust growth, fueled by the growing reliance on automation, robotics, and IoT solutions that enhance productivity and efficiency. With this backdrop of technological evolution and economic promise, leading industrial companies, such as ESE and ROP, stand to capitalize on the optimistic industry outlook. However, ESE’s higher profitability and promising near-term outlook favor it as the better stock pick.

Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. Click here to see all the top-rated stocks in the Industrial – Machinery industry. Get all the A or B-rated  Industrial – Equipment stocks here.

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ROP shares were trading at $504.00 per share on Friday afternoon, down $6.30 (-1.23%). Year-to-date, ROP has declined -2.89%, versus a -0.87% rise in the benchmark S&P 500 index during the same period.

About the Author: Shweta Kumari

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions. More...

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