Rogers (ROG)

Engineered materials manufacturer Rogers (NYSE:ROG) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 2.7% year on year to $216 million. Guidance for next quarter’s revenue was better than expected at $197.5 million at the midpoint, 1.3% above analysts’ estimates. Its non-GAAP profit of $0.90 per share was 29.8% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1832, making it one of America's oldest continuously operating companies, Rogers (NYSE:ROG) designs and manufactures specialized engineered materials and components used in electric vehicles, telecommunications, renewable energy, and other high-performance applications.

The sector could see higher demand as the prevalence of advanced electronics increases in industries such as automotive, healthcare, aerospace, and computing. The high-performance components and contract manufacturing expertise required for autonomous vehicles and cloud computing datacenters, for instance, will benefit companies in the space. However, headwinds include geopolitical risks, particularly U.S.-China trade tensions that could disrupt component sourcing and production as the Trump administration takes an increasingly antagonizing stance on foreign relations. Additionally, stringent environmental regulations on e-waste and emissions could force the industry to pivot in potentially costly ways.

Rogers competes with other specialty materials manufacturers such as DuPont (NYSE:DD), 3M (NYSE:MMM), Hexcel Corporation (NYSE:HXL), and Victrex plc (LON:VCT), as well as with more specialized private companies in specific product categories.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $801.5 million in revenue over the past 12 months, Rogers is a small player in the business services space, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and numerous distribution channels.

As you can see below, Rogers struggled to increase demand as its $801.5 million of sales for the trailing 12 months was close to its revenue five years ago. This shows demand was soft, a rough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Rogers’s recent performance shows its demand remained suppressed as its revenue has declined by 7% annually over the last two years.

This quarter, Rogers reported modest year-on-year revenue growth of 2.7% but beat Wall Street’s estimates by 4.1%. Company management is currently guiding for a 2.8% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 5.8% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and implies its newer products and services will fuel better top-line performance.

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

Rogers was profitable over the last five years but held back by its large cost base. Its average operating margin of 8.5% was weak for a business services business.

Looking at the trend in its profitability, Rogers’s operating margin decreased by 12.3 percentage points over the last five years. Rogers’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, Rogers generated an operating margin profit margin of 7.3%, down 2.7 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Rogers, its EPS declined by 15.7% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.

Diving into the nuances of Rogers’s earnings can give us a better understanding of its performance. As we mentioned earlier, Rogers’s operating margin declined by 12.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Rogers, its two-year annual EPS declines of 31.7% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Rogers reported adjusted EPS of $0.90, down from $0.98 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Rogers’s full-year EPS of $1.97 to grow 23.5%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Rogers has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 6.3% over the last five years, slightly better than the broader business services sector.

Taking a step back, we can see that Rogers’s margin dropped by 5.4 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

Rogers’s free cash flow clocked in at $21.2 million in Q3, equivalent to a 9.8% margin. The company’s cash profitability regressed as it was 2.2 percentage points lower than in the same quarter last year, but it’s still above its five-year average. We wouldn’t put too much weight on this quarter’s decline because investment needs can be seasonal, causing short-term swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Rogers historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5.7%, somewhat low compared to the best business services companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Rogers’s ROIC has decreased over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Companies with more cash than debt have lower bankruptcy risk.

Rogers is a profitable, well-capitalized company with $167.8 million of cash and $23 million of debt on its balance sheet. This $144.8 million net cash position is 9.3% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

It was good to see Rogers beat analysts’ EPS expectations this quarter. We were also excited its EPS guidance for next quarter outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this quarter featured some important positives. The stock traded up 6.3% to $88.40 immediately following the results.

Updated: December 4, 2025 at 10:39 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Rogers.

Rogers falls short of our quality standards. To begin with, its revenue growth was weak over the last five years. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its declining EPS over the last five years makes it a less attractive asset to the public markets. On top of that, its declining operating margin shows the business has become less efficient.

Rogers’s P/E ratio based on the next 12 months is 28.3x. This valuation tells us a lot of optimism is priced in - you can find more timely opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $96.67 on the company (compared to the current share price of $87.25).