Steris (STE) AI Stock Analysis

336 Followers

Top Page

Steris

(NYSE:STE)

78Outperform

Steris demonstrates solid financial performance with strong revenue growth and profitability. While the high P/E ratio suggests potential overvaluation, the company's operational resilience and cash flow strength are positive factors. The earnings call highlighted mixed results, with strong growth tempered by margin pressures and currency impacts.

Positive Factors

Revenue Growth

Healthcare segment revenue increased by 7% year-over-year, driven by growth in consumable and service revenue.

Shareholder Value

Completion of $100 million in share repurchases and debt reduction efforts demonstrate a commitment to enhancing shareholder value and improving financial stability.

Negative Factors

Financial Guidance

Management lowered their revenue and EPS guidance modestly given increased currency headwinds and delayed Healthcare capital equipment orders.

Legal Expenses

Operating margin was down 10 bps Y/Y and below consensus as STE faced increased legal expenses related to its ongoing ethylene oxide (EO) trial.

Tariff Exposure

Tariff exposure is a concern for the company, affecting its overall business operations.

Steris (STE) vs. S&P 500 (SPY)

Market Cap

$20.89B

Dividend Yield1.05%

Average Volume (3M)624.97K

Price to Earnings (P/E)45.1

Beta (1Y)0.43

Revenue Growth-0.17%

EPS Growth-17.34%

CountryUS

Employees18,000

SectorHealthcare

Sector Strength78

IndustryMedical - Devices

Share Statistics

EPS (TTM)4.71

Shares Outstanding98,250,786

10 Day Avg. Volume587,372

30 Day Avg. Volume624,968

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)4.25

Price to Cash Flow (P/CF)16.30

P/FCF Ratio16.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$265.00

Price Target Upside27.07% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Steris Business Overview & Revenue Model

Company DescriptionSteris (STE) is a leading provider of infection prevention and other procedural products and services, primarily catering to the healthcare, pharmaceutical, and research industries. The company specializes in sterilization and surgical products, infection prevention solutions, and laboratory equipment. It operates across several sectors, including healthcare, life sciences, and applied sterilization technologies, offering a range of products such as sterilizers, surgical tables, and endoscopy processing equipment.

How the Company Makes MoneySteris generates revenue through the sale of its diverse range of infection prevention and sterilization products and services. The company's key revenue streams include the healthcare sector, where it provides hospitals and clinics with critical equipment like sterilizers and surgical tables. In addition, Steris serves the life sciences sector by offering laboratory equipment and sterilization technologies essential for pharmaceutical and research applications. Another significant revenue source is the applied sterilization technologies sector, where Steris delivers contract sterilization services to manufacturers of medical devices and other products. Strategic partnerships with healthcare providers and life sciences organizations further bolster its earnings by expanding its market reach and enhancing its service offerings.

Steris Financial Statement Overview

Summary

Steris exhibits strong financial performance with solid revenue growth, profitability, and efficient cash flow management. The low debt-to-equity ratio and high equity ratio provide a stable financial foundation. However, the decrease in total assets and slight decline in EBITDA warrant attention.

Income Statement

Very Positive

Steris has demonstrated strong revenue growth with a 5.0% increase TTM over the previous year and solid profitability. The gross profit margin is robust at 44.7%, and the net profit margin has improved to 8.7% TTM. The EBITDA margin of 22.7% also reflects healthy operational efficiencies. However, the slight decline in EBITDA compared to the previous year suggests a need to monitor operational cost management.

Balance Sheet

Positive

The balance sheet of Steris is strong, with a low debt-to-equity ratio of 0.02 TTM, indicating minimal leverage. The equity ratio stands at 64.2%, showcasing a stable financial structure. ROE has improved to 7.3%, reflecting enhanced profitability for shareholders. However, the decrease in total assets over the past year suggests that asset management could be optimized.

Cash Flow

Very Positive

Steris has shown significant improvement in cash flow, with a free cash flow growth rate of 22.6% TTM. The operating cash flow to net income ratio is robust at 2.44, indicating strong cash generation relative to earnings. The free cash flow to net income ratio of 1.61 further underscores efficient cash utilization. Despite these strengths, the volatility in investing cash flow suggests a need for careful investment strategy management.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
5.40B	5.14B	4.96B	4.59B	3.11B	3.03B
	Gross Profit
2.41B	2.22B	2.16B	2.02B	1.34B	1.32B
	EBIT
953.28M	836.12M	268.19M	425.62M	323.30M	341.08M
	EBITDA
1.23B	1.41B	1.34B	957.20M	800.33M	743.18M
	Net Income Common Stockholders
467.59M	378.24M	107.03M	243.89M	397.40M	407.66M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
214.97M	207.02M	208.36M	348.32M	220.53M	319.58M
	Total Assets
1.24B	11.06B	10.82B	11.45B	6.57B	5.43B
	Total Debt
210.00M	3.38B	3.02B	3.12B	1.65B	1.15B
	Net Debt
-4.97M	3.18B	2.81B	2.78B	1.43B	830.94M
	Total Liabilities
483.91M	4.75B	4.73B	4.91B	2.68B	2.02B
	Stockholders Equity
753.71M	6.30B	6.09B	6.54B	3.89B	3.41B
Cash Flow		Free Cash Flow
751.41M	612.95M	394.98M	397.25M	450.38M	376.04M
	Operating Cash Flow
1.14B	973.27M	756.95M	684.81M	689.64M	590.56M
	Investing Cash Flow
362.97M	-887.36M	-383.33M	-666.56M	-1.15B	-319.74M
	Financing Cash Flow
-1.54B	-85.19M	-498.72M	115.83M	345.62M	-163.15M

Steris Technical Analysis

Technical Analysis Sentiment

Negative

Last Price208.55

Price Trends

50DMA

222.88

Negative

100DMA

217.44

Negative

200DMA

223.18

Negative

Market Momentum

MACD

0.53

Positive

RSI

53.24

Neutral

STOCH

73.45

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STE, the sentiment is Negative. The current price of 208.55 is below the 20-day moving average (MA) of 223.53, below the 50-day MA of 222.88, and below the 200-day MA of 223.18, indicating a bearish trend. The MACD of 0.53 indicates Positive momentum. The RSI at 53.24 is Neutral, neither overbought nor oversold. The STOCH value of 73.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STE.

Steris Risk Analysis

Steris disclosed 37 risk factors in its most recent earnings report. Steris reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Steris Peers Comparison

Overall Rating

UnderperformOutperform

Sector (48)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
STE	78 Outperform	$20.89B	45.09	9.61%	1.05%	-0.17%	-17.34%
SNN	78 Outperform	$11.52B	27.87	7.82%	2.74%	4.58%	55.99%
PODD	76 Outperform	$17.99B	42.68	43.03%	―	22.07%	101.95%
GMED	75 Outperform	$11.01B	95.04	2.52%	―	60.62%	-35.88%
ZBH	73 Outperform	$21.37B	24.22	7.24%	0.92%	3.84%	-9.29%
DXCM	61 Neutral	$23.38B	43.26	27.63%	―	11.34%	4.24%
Sector *	48 Neutral	$6.27B	1.17	-48.19%	2.68%	17.28%	1.24%

* Healthcare Sector Average

Performance Comparison

STE

Steris

208.55

1.40

0.68%

DXCM

Dexcom

60.69

-79.63

-56.75%

PODD

Insulet

247.04

69.63

39.25%

SNN

Smith & Nephew Snats

24.97

1.22

5.14%

ZBH

Zimmer Biomet Holdings

102.79

-23.81

-18.81%

GMED

Globus Medical

68.64

15.53

29.24%

Steris Earnings Call Summary

Earnings Call Date: Feb 5, 2025 | % Change Since: -5.32% | Next Earnings Date: May 20, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed view, with strong revenue growth and improved gross margins balanced by challenges in EBIT margin and segment-specific revenue declines, particularly in healthcare capital equipment and life sciences. Positive trends in free cash flow and the AST segment's growth were countered by ongoing litigation expenses and unfavorable currency impacts.

Highlights

Revenue Growth

Total revenue grew 6% year-over-year with constant currency organic revenue also up 6%, driven by volume and price increases.

Gross Margin Improvement

Gross margin increased by 90 basis points compared to the prior year, reaching 44.6%, driven by positive price and productivity.

Adjusted Earnings Per Share Increase

Adjusted earnings per diluted share from continuing operations increased by 11% to $2.32.

Healthcare Revenue Growth

Healthcare segment's constant currency organic revenue grew 7%, driven by strong recurring revenue streams.

AST Segment Growth

AST segment's constant currency organic revenue grew 10%, driven by a 10% increase in services.

Strong Free Cash Flow

Free cash flow for the first nine months of fiscal 2025 was $588 million, on track to meet the full-year guidance of $700 million.

Lowlights

EBIT Margin Decline

EBIT margin decreased by 10 basis points to 23.3% due to litigation expenses and increased healthcare benefit costs.

Healthcare Capital Equipment Revenue Decline

Healthcare capital equipment revenue declined 5% due to shipment timing delays.

Life Sciences Revenue Decline

Life Sciences segment saw a 1% decline in constant currency organic revenue, driven by a decline in capital equipment revenue.

Currency Exchange Impact

Currency rate changes negatively impacted both revenue and profit expectations.

Litigation and Legal Expenses

Significant expenses incurred due to the ethylene oxide trial, with expected continued legal expenses in the upcoming quarter.

Company Guidance

During the STERIS plc Third Quarter 2025 conference call, the company provided a comprehensive overview of its financial performance and outlook. Key metrics included a 6% growth in total revenue and constant currency organic revenue, driven by volume and pricing adjustments. Gross margin improved by 90 basis points to 44.6%, while EBIT margin slightly decreased by 10 basis points to 23.3%. The adjusted effective tax rate was reported at 24.5%, and net income from continuing operations was $229 million. Adjusted earnings per diluted share increased by 11% to $2.32. The company noted capital expenditures of $299 million and free cash flow of $588 million for the first nine months, aligning with a full-year guidance of approximately $700 million. STERIS highlighted a strong backlog in healthcare with robust order growth despite some delays in capital equipment shipments. The company also adjusted its revenue growth outlook to approximately 6% due to currency impacts and maintained its free cash flow forecast, signaling confidence in its financial resilience amidst ongoing operational challenges.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.