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Steris (STE)
NYSE:STE
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Steris
(NYSE:STE)
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Rating:69Neutral
Price Target:
$267.00
▲(1.22% Upside)
Action:DowngradedDate:02/06/26
The score is primarily driven by solid fundamentals (improving profitability and strong cash generation) and a constructive earnings update with maintained FY2026 guidance. These positives are tempered by weak near-term technicals (trading below major moving averages with negative momentum) and a relatively expensive valuation (P/E ~36.5 with ~1% yield), plus tariff-driven margin pressure highlighted on the call.
Positive Factors
Strong cash generation
Consistent, high operating cash flow and substantial free cash flow provide durable funding for capex, working capital, buybacks, dividends, and M&A. Over a 2–6 month horizon this cash conversion reduces execution risk and supports strategic flexibility even if revenue softens.
Improving profitability and margins
Material margin improvement signals structural gains from pricing, productivity, and mix shifts (services/consumables). Sustained higher margins enhance earnings resilience versus modest top-line growth and support cash generation and reinvestment for the medium term.
Backlog and diversified revenue streams
Sizeable equipment backlog plus recurring services and consumables growth provide multi-quarter revenue visibility and lower cyclicality. Diversified streams (capital, services, consumables) make near-term demand swings less likely to erode baseline revenue over the next several months.
Negative Factors
Tariff-driven margin pressure
Meaningful and recurring tariff costs compress gross and operating margins and may persist absent durable policy or sourcing changes. Even with mitigation efforts, elevated tariff exposure can structurally reduce profitability and free cash flow over the next several quarters.
Decelerating revenue growth
Slower top-line expansion increases reliance on margin improvement and cost control to drive earnings growth. If revenue momentum remains muted, the company has less organic runway for EPS growth, making it more sensitive to cost or demand shocks in the near term.
Balance-sheet reporting inconsistency
Unclear or inconsistent leverage reporting raises uncertainty about true financial flexibility. For multimonth planning, accurate debt metrics matter for M&A, covenants and capital allocation; ambiguity increases risk assessment friction for stakeholders and management decisions.
Steris (STE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$24.46B
Dividend Yield0.94%
Average Volume (3M)752.73K
Price to Earnings (P/E)34.5
Beta (1Y)0.41
Revenue Growth5.15%
EPS Growth60.30%
CountryUS
Employees18,000
SectorHealthcare
Sector Strength45
IndustryMedical - Devices
Share Statistics
EPS (TTM)2.53
Shares Outstanding98,075,030
10 Day Avg. Volume821,450
30 Day Avg. Volume752,728
Financial Highlights & Ratios
PEG Ratio0.58
Price to Book (P/B)3.38
Price to Sales (P/S)4.09
P/FCF Ratio28.72
Enterprise Value/Market Cap1.07
Enterprise Value/Revenue4.50
Enterprise Value/Gross Profit10.20
Enterprise Value/Ebitda19.25
Forecast
1Y Price Target
$295.50Price Target Upside12.03% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
EPS Forecast (FY)10.21
Revenue Forecast (FY)$5.94B
Steris Business Overview & Revenue Model
Company DescriptionSTERIS plc provides infection prevention and other procedural products and services worldwide. It operates through four segments: Healthcare, Applied Sterilization Technologies, Life Sciences, and Dental. The Healthcare segment offers cleaning chemistries and sterility assurance products; automated endoscope reprocessing system and tracking products; accessories for gastrointestinal (GI) procedures, washers, sterilizers, and other pieces of capital equipment for the operation of a sterile processing department; and equipment used directly in the operating room, including surgical tables, lights, and connectivity solutions, as well as equipment management services. It also provides capital equipment installation, maintenance, upgradation, repair, and troubleshooting services; preventive maintenance programs and repair services; instrument and endoscope repair and maintenance services; and custom process improvement consulting and outsourced instrument sterile processing services. The Applied Sterilization Technologies segment provides contract sterilization and testing services for medical device and pharmaceutical manufacturers through a network of approximately 50 contract sterilization and laboratory facilities. The Life Sciences segment designs, manufactures and sells consumable products, such as formulated cleaning chemistries, barrier and sterility assurance products, steam and vaporized hydrogen peroxide sterilizers, and washer disinfectors. This segment also offers equipment installation, maintenance, upgradation, repair, and troubleshooting services; and preventive maintenance programs and repair services. The Dental segment provides hand and powered dental instruments, infection control products, personal protective equipment, and water quality products for dental suite. The company serves its products and services to hospitals, other healthcare providers, and pharmaceutical manufacturers. The company was founded in 1985 and is based in Dublin, Ireland.
How the Company Makes MoneySteris generates revenue through multiple streams, including the sale of medical devices, sterilization services, and integrated solutions for healthcare facilities. Key revenue streams come from their core products such as sterilizers, surgical instruments, and consumables used in infection prevention. Additionally, Steris earns income through service contracts and maintenance agreements for their equipment, ensuring ongoing customer support and product functionality. The company has established significant partnerships with healthcare organizations, enhancing its market reach and driving sales through bundled offerings and collaborative solutions. Factors contributing to Steris's earnings include the increasing demand for infection control products, regulatory compliance in healthcare settings, and innovation in surgical technologies.
Steris Key Performance Indicators (KPIs)
Any
Operating Margin by Segment
Measures the efficiency of each segment in converting revenue into profit, indicating competitive strengths or weaknesses and potential areas for cost optimization.
Measures the efficiency of each segment in converting revenue into profit, indicating competitive strengths or weaknesses and potential areas for cost optimization.
Data provided by:
The Fly
The FlySteris Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:May 20, 2026
Earnings Call Sentiment Positive
The call presented solid top-line growth, EPS expansion, strong segment-level performance (notably AST capital equipment and healthcare services), and maintained full-year guidance — indicating operational resilience. However, meaningful margin pressure from tariffs and inflation, a notable gross margin decline, and seasonal/timing risks for the fourth quarter temper the outlook. Management is actively pursuing mitigation efforts and remains disciplined on capital and M&A. Overall, positives (revenue, EPS, segment momentum, backlog, leverage) outweigh the headwinds (tariffs, margin compression, near-term volatility).Q3-2026 Updates
Positive Updates
Top-Line Growth
Total as-reported revenue grew 9% in the third quarter; constant currency organic revenue grew 8%, driven by volume and ~200 basis points of price.
Earnings and EPS Expansion
Adjusted net income from continuing operations was $249.4 million and adjusted diluted EPS was $2.53, a 9% increase year-over-year.
Segment Strength — AST Capital Equipment
AST constant currency organic revenue grew 8% with capital equipment revenue up 103% year-over-year; AST EBIT margin improved to 45.1% (up 30 basis points).
Service and Consumables Momentum
Healthcare services grew 11% in the quarter and consumables grew 8%; Life Sciences consumables grew 11% and Life Sciences constant currency organic revenue increased 5%.
Backlog and Capital Stability
Healthcare capital equipment backlog remained over $400 million and Life Sciences backlog held above $100 million, supporting future revenue visibility.
Maintained Full-Year Guidance
Company maintained fiscal 2026 outlook: ~8%–9% as-reported revenue growth, 7%–8% constant currency organic revenue growth, EPS range (noted as) approximately $10.00 to $10.30, free cash flow guidance $850 million, and CapEx guidance $375 million.
Balance Sheet and Leverage
Ended the quarter with $1.9 billion in total debt and gross debt to EBITDA of approximately 1.2x, implying modest leverage and capacity to pursue strategic actions.
Cash Flow and Capital Discipline
Company reported year-to-date capital expenditures of $278.8 million and depreciation & amortization of $363.1 million; management highlighted year-over-year free cash flow improvement driven by higher earnings and lower capital spending.
Operational Actions and Mitigation
Management is pursuing tariff mitigation (supplier shifts, negotiations, alternative sourcing), productivity improvements, and efficiency gains to offset cost pressures.
Negative Updates
Margin Pressure — Gross Margin Decline
Gross margin declined 70 basis points year-over-year to 43.9%, with positive price and productivity being more than offset by increased tariffs and inflation.
EBIT Margin Compression
Company-level EBIT margin decreased 40 basis points to 22.9% of revenue; Healthcare EBIT margin fell 100 basis points to 24.3%, and Life Sciences margins declined 20 basis points.
Tariff Headwinds
Approximately $16 million of pretax tariff impact in the quarter; company cites a fiscal 2026 annual run rate of ~$55 million in tariffs and expects an incremental ~$10 million more, reducing likelihood of achieving the high end of EPS range.
Fourth-Quarter / Near-Term Softness and Tough Comparisons
Management cautioned about a seasonal slowdown in the second half and a tough prior-year fourth-quarter comparison (notably in AST capital equipment), and expects some continued slowing in healthcare services versus earlier in the year.
Orders and Momentum Nuances
Healthcare orders were down 1% year-to-date versus a strong prior year; AST services showed variability month-to-month (weak October, recovery by December), indicating some near-term demand volatility.
Tariff Exposure Linked to Capital Mix
Management noted that an uptick in metals tariffs and a mix shift toward capital equipment increase tariff exposure, creating margin risk as capital sales grow.
Conservative Cash Flow Execution Risk in Q4
Although free cash flow guidance was maintained at $850 million, management cited timing, heavy capital quarter, and seasonality/weather as reasons for conservatism in Q4 cash flow expectations.
Company Guidance
STERIS said it is maintaining FY2026 guidance, calling for as‑reported revenue growth of about 8–9% and constant‑currency organic revenue growth of 7–8%, adjusted diluted EPS guidance around $10.00–$10.30 (with the company noting the high end is less likely given roughly $10M of incremental tariffs), expected free cash flow of $850M and planned CapEx of $375M; management said tariffs are modeled at roughly a $55M annual run‑rate (Q3 included about $16M pretax tariff impact). For context, Q3 adjusted EPS was $2.53 (+9%), gross margin was 43.9% (‑70 bps), EBIT margin 22.9% (‑40 bps), YTD CapEx $278.8M, D&A $363.1M, reported nine‑month free cash flow $7.368B, total debt $1.9B and gross debt/EBITDA ≈1.2x.Steris Financial Statement Overview
Summary
Strong profitability and cash generation support the score (TTM gross margin ~44%, operating margin ~17%, net margin ~12%; TTM operating cash flow $1.27B and free cash flow $917M). Offsetting factors include decelerating TTM revenue growth (~2.2%), some free-cash-flow growth volatility, and an identified inconsistency around TTM debt/leverage that reduces confidence in the latest balance-sheet read.Income Statement
STERIS shows solid profitability and improving earnings quality. TTM (Trailing-Twelve-Months) revenue is $5.83B with healthy margins (gross margin ~44%, operating margin ~17%, net margin ~12%). Revenue growth is modest in TTM (~2.2%) versus stronger growth in prior years, but profitability has materially improved from FY2023’s very low net margin (~2.4%) to FY2024–TTM (net margin ~7.4% to ~12.1%). A key watch-out is that growth has decelerated, so future upside will rely more on sustained margin discipline than top-line acceleration.78
Positive
Balance Sheet
The balance sheet appears reasonably strong with sizable equity ($7.17B in TTM (Trailing-Twelve-Months)) and improving leverage versus prior years (debt-to-equity down from ~0.53 in FY2023–FY2024 to ~0.33 in FY2025 annual). Return on equity has also improved to ~10.2% in TTM (Trailing-Twelve-Months) from low single digits in FY2022–FY2024, signaling better capital efficiency. However, leverage has been meaningfully higher historically (~0.50+), and the TTM (Trailing-Twelve-Months) debt figure is shown as zero while the leverage ratio is not—this inconsistency reduces confidence in the latest leverage read and keeps the score from being higher.74
Positive
Cash Flow
Cash generation is a clear positive: TTM (Trailing-Twelve-Months) operating cash flow is $1.27B and free cash flow is $917M, with cash flow exceeding accounting earnings (operating cash flow is ~1.46x net income). Free cash flow conversion is decent (free cash flow is ~74% of net income in TTM (Trailing-Twelve-Months)) and has improved versus earlier years. The main weakness is volatility in free cash flow growth (TTM (Trailing-Twelve-Months) down ~4.6% after a stronger FY2024), suggesting periodic working-capital or investment swings.72
Positive
| Breakdown | TTM | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.83B | 5.46B | 5.14B | 4.54B | 4.22B | 3.11B |
| Gross Profit | 2.57B | 2.40B | 2.22B | 1.98B | 1.88B | 1.34B |
| EBITDA | 1.36B | 1.36B | 1.41B | 1.34B | 1.01B | 773.95M |
| Net Income | 707.77M | 614.64M | 378.24M | 107.03M | 243.89M | 397.40M |
Balance Sheet | ||||||
| Total Assets | 10.59B | 10.15B | 11.06B | 10.82B | 11.42B | 6.57B |
| Cash, Cash Equivalents and Short-Term Investments | 423.70M | 171.70M | 207.02M | 208.36M | 348.32M | 220.53M |
| Total Debt | 2.05B | 2.20B | 3.38B | 3.25B | 3.28B | 1.80B |
| Total Liabilities | 3.42B | 3.53B | 4.75B | 4.73B | 4.88B | 2.68B |
| Stockholders Equity | 7.17B | 6.60B | 6.30B | 6.08B | 6.53B | 3.88B |
Cash Flow | ||||||
| Free Cash Flow | 917.10M | 778.00M | 612.95M | 394.98M | 397.25M | 450.38M |
| Operating Cash Flow | 1.27B | 1.15B | 973.27M | 756.95M | 684.81M | 689.64M |
| Investing Cash Flow | -365.10M | 388.77M | -887.36M | -383.33M | -666.56M | -1.15B |
| Financing Cash Flow | -648.37M | -1.57B | -85.19M | -498.72M | 115.83M | 345.62M |
Steris Technical Analysis
Neutral
263.77
Price Trends
255.34
Negative
252.07
Negative
244.83
Positive
Market Momentum
-2.81
Positive
47.27
Neutral
82.20
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STE, the sentiment is Neutral. The current price of 263.77 is above the 20-day moving average (MA) of 253.47, above the 50-day MA of 255.34, and above the 200-day MA of 244.83, indicating a neutral trend. The MACD of -2.81 indicates Positive momentum. The RSI at 47.27 is Neutral, neither overbought nor oversold. The STOCH value of 82.20 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for STE.
Steris Risk Analysis
Steris disclosed 36 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
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $28.02B | 34.53 | 34.50% | ― | 14.21% | 5.66% | |
69 Neutral | $24.46B | 34.50 | 10.44% | 0.94% | 5.15% | 60.30% | |
69 Neutral | $15.22B | 32.07 | 9.20% | 2.28% | 5.78% | 61.52% | |
68 Neutral | $18.15B | 71.16 | 18.12% | ― | 27.12% | -41.72% | |
65 Neutral | $19.47B | 27.68 | 5.60% | 1.05% | 5.47% | -23.03% | |
64 Neutral | $29.74B | 29.52 | ― | 3.30% | -0.76% | -55.03% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.