Steris (STE) AI Stock Analysis

• Market Cap: $21.04B
• Dividend Yield: 0.94%
• Average Volume (3M): 960.37K
• Price to Earnings (P/E): 32.3
• Beta (1Y): 0.47
• Revenue Growth: 5.15%
• EPS Growth: 60.30%
• Country: US
• Employees: 18,000
• Sector: Healthcare
• Sector Strength: 45
• Industry: Medical - Devices
• EPS (TTM): 2.53
• Shares Outstanding: 98,075,030
• 10 Day Avg. Volume: 914,513
• 30 Day Avg. Volume: 960,371
• PEG Ratio: 0.58
• Price to Book (P/B): 3.38
• Price to Sales (P/S): 4.09
• P/FCF Ratio: 28.72
• Enterprise Value/Market Cap: 1.08
• Enterprise Value/Revenue: 3.89
• Enterprise Value/Gross Profit: 8.83
• Enterprise Value/Ebitda: 16.65
• 1Y Price Target: $295.50
• Price Target Upside: 12.03% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): 10.21
• Revenue Forecast (FY): $5.94B

• Rating: 69 Neutral
• Price Target: $235.00 ▼(-10.91% Downside)
• Action: Downgraded Date: 02/06/26
• Date: Action: Downgraded 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

Cash generation

Consistent, sizable cash generation (OCF $1.27B; FCF $917M; FCF ~74% of net income) provides durable funding for capex, share repurchases, debt paydown and M&A. Strong cash conversion reduces reliance on external financing and supports long-term strategic investments.

Improved profitability and margins

Material margin recovery from prior weak years to gross ~44% and operating ~17% indicates better pricing, productivity and cost control. Higher margins create durable earnings power and cushioning for cyclical top-line softness, sustaining returns and reinvestment capacity.

Recurring revenue and backlog visibility

A mix of consumables, service contracts and multi-year backlog (> $500M combined) gives predictable revenue and high customer retention. Installed-base driven consumables and services enable cross-sell and steady organic growth even if capital equipment cycles soften.

Negative Factors

Revenue deceleration

Top-line growth has slowed materially to low single digits on a TTM basis, reducing operating leverage upside. Sustained weaker organic growth forces reliance on margin expansion and acquisitions to meet higher growth expectations, raising execution risk over coming quarters.

Tariff-driven margin pressure

Ongoing tariffs and inflation are a structural cost headwind (modeled ~$55M/year) that compress gross margins unless mitigated by pricing or sourcing changes. Mitigation is possible but may be slow, creating sustained margin pressure and uncertainty in medium-term profitability.

Balance-sheet reporting inconsistency

An inconsistency in reported TTM debt versus leverage ratios undermines clarity on true indebtedness and financial flexibility. Even with improved leverage metrics, reporting ambiguity raises risk about covenant headroom, acquisition capacity and investor confidence over time.

Steris Business Overview & Revenue Model

Company Description

STERIS 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 Money

STERIS makes money primarily by selling a mix of (1) capital equipment, (2) recurring consumables, and (3) service and outsourced solutions tied to sterilization and infection prevention. 1) Sale of capital equipment (one-time or project-based revenue) - STERIS generates revenue from the sale of sterilization and decontamination equipment used in hospitals, ambulatory surgery centers, and other healthcare facilities (e.g., steam sterilizers, low-temperature sterilization systems, washer-disinfectors, endoscope reprocessing systems, and related infrastructure). - It also sells equipment used by life sciences and medical device manufacturers, such as sterilization systems, cleanroom/contamination control products, and related processing equipment. - These sales are often larger, less frequent purchases and can be influenced by hospital capex cycles, facility expansions, and new production line builds in life sciences. 2) Recurring consumables and accessories (repeat-purchase revenue) - A significant component of STERIS’s economics comes from consumables and accessories that are used routinely with installed equipment (e.g., cleaning chemistries, sterilant-related consumables, test indicators/verification products, and other reprocessing supplies). - This stream is typically more recurring because customers must replenish supplies as procedures and production volumes continue, and because consumables are often specified or validated for particular workflows. 3) Service contracts, maintenance, and field service (recurring and usage-driven revenue) - STERIS earns revenue from installation, preventive maintenance, repairs, upgrades, and service agreements for its installed base of equipment. - These services can be contracted (e.g., multi-year maintenance agreements) and help stabilize revenue because healthcare and regulated manufacturing environments require high equipment uptime and documented compliance. 4) Outsourced and fee-for-service offerings (recurring/volume-based revenue) - In healthcare, STERIS provides outsourced sterile processing and related services (commonly structured as per-procedure, per-tray, per-visit, or contract-based arrangements depending on the program). - In life sciences, STERIS provides laboratory and specialty services that support contamination control and product/process qualification needs; revenue is generally earned through service fees tied to ongoing testing, projects, or recurring programs. 5) Customer mix and operating leverage drivers - STERIS’s revenue is supported by a broad base of end markets: routine healthcare procedure volumes drive recurring demand for consumables and processing services, while regulatory and quality requirements in pharma/medical device manufacturing support ongoing spending on validation, contamination control, maintenance, and upgrades. - The company’s installed base supports cross-selling: equipment placements can lead to follow-on consumable pull-through and service contract attachments. Significant partnerships or factors contributing to earnings: null

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.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 263.77
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

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 263.77 is above the 20-day moving average (MA) of 239.92, above the 50-day MA of 250.25, and above the 200-day MA of 244.91, indicating a bearish trend. The MACD of -9.31 indicates Positive momentum. The RSI at 24.13 is Positive, neither overbought nor oversold. The STOCH value of 8.36 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STE.

Steris Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DXCM	77 Outperform	$24.72B	30.97	32.44%	―	14.21%	5.66%
SNN	72 Outperform	$14.03B	22.70	9.20%	2.28%	5.78%	61.52%
STE	69 Neutral	$21.04B	32.31	10.21%	0.94%	5.15%	60.30%
PODD	68 Neutral	$15.48B	80.92	17.36%	―	27.12%	-41.72%
ZBH	65 Neutral	$18.23B	25.25	5.60%	1.05%	5.47%	-23.03%
PHG	64 Neutral	$26.61B	24.78	8.21%	3.30%	-0.76%	-55.03%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%