Steris (STE) AI Stock Analysis

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Steris

(NYSE:STE)

76Outperform

Steris's overall stock score of 76 is driven by strong financial performance and moderate technical indicators. The company's robust revenue growth and cash flow management strengthen its market position, although high valuation metrics pose concerns. The earnings call highlighted both strengths in revenue growth and challenges in managing costs and currency impacts. The lack of significant corporate events further consolidates the focus on financial and technical aspects.

Positive Factors

Financial Performance

STE's F4Q25 revenue and EPS beat consensus.

Investor Confidence

Investor interest in Steris as a 'safe-haven' has risen considerably, highlighting its ability to deliver stable and reliable growth.

Negative Factors

Foreign Exchange Impact

Management attributed the reduction to the impact of foreign exchange rates, as forward rates through the end of STE's fiscal year are now expected to be slightly unfavorable to revenue.

Legal Challenges

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.

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

Market Cap

$24.72B

Dividend Yield0.89%

Average Volume (3M)738.01K

Price to Earnings (P/E)40.6

Beta (1Y)0.54

Revenue Growth-0.17%

EPS Growth-17.34%

CountryUS

Employees18,000

SectorHealthcare

Sector Strength41

IndustryMedical - Devices

Share Statistics

EPS (TTM)2.74

Shares Outstanding98,250,786

10 Day Avg. Volume872,875

30 Day Avg. Volume738,010

Financial Highlights & Ratios

PEG Ratio1.28

Price to Book (P/B)3.74

Price to Sales (P/S)0.00

P/FCF Ratio32.90

Enterprise Value/Market Cap1.00

Enterprise Value/Revenue1.14

Enterprise Value/Gross Profit10.23

Enterprise Value/Ebitda4.52

Forecast

1Y Price Target

$262.40

Price Target Upside4.30% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

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 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 company's low leverage and high equity ratio provide a stable financial foundation. While the decrease in total assets and slight decline in EBITDA warrant attention, the company's financial health remains robust, positioning it well in the Medical Equipment & Supplies industry.

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	2.24B	2.16B	2.02B	1.34B	1.32B
	EBIT
953.28M	836.12M	268.19M	425.62M	323.30M	341.08M
	EBITDA
1.36B	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
259.37M	207.02M	208.36M	348.32M	220.53M	319.58M
	Total Assets
10.80B	11.06B	10.82B	11.45B	6.57B	5.43B
	Total Debt
3.10B	3.38B	3.02B	3.12B	1.65B	1.15B
	Net Debt
2.84B	3.18B	2.81B	2.78B	1.43B	830.94M
	Total Liabilities
4.75B	4.75B	4.73B	4.91B	2.68B	2.02B
	Stockholders Equity
6.05B	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

Positive

Last Price251.59

Price Trends

50DMA

224.88

Positive

100DMA

220.36

Positive

200DMA

223.78

Positive

Market Momentum

MACD

4.77

Negative

RSI

73.65

Negative

STOCH

81.61

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STE, the sentiment is Positive. The current price of 251.59 is above the 20-day moving average (MA) of 227.61, above the 50-day MA of 224.88, and above the 200-day MA of 223.78, indicating a bullish trend. The MACD of 4.77 indicates Negative momentum. The RSI at 73.65 is Negative, neither overbought nor oversold. The STOCH value of 81.61 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (52)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DXCM	81 Outperform	$33.52B	64.17	23.72%	―	9.11%	-17.87%
SNN	77 Outperform	$12.63B	30.60	7.82%	2.49%	4.58%	55.99%
STE	76 Outperform	$24.72B	40.58	9.45%	0.89%	-0.17%	-17.34%
PODD	76 Outperform	$22.85B	58.44	37.92%	―	23.49%	71.25%
ZBH	70 Outperform	$19.18B	21.49	7.31%	0.99%	3.30%	-2.39%
GMED	68 Neutral	$8.29B	45.81	4.63%	―	32.26%	112.87%
Sector *	52 Neutral	$5.15B	3.02	-44.64%	2.83%	16.44%	-0.47%

* Healthcare Sector Average

Performance Comparison

STE

Steris

251.59

21.13

9.17%

DXCM

Dexcom

85.48

-45.21

-34.59%

PODD

Insulet

324.75

140.61

76.36%

SNN

Smith & Nephew Snats

28.88

3.50

13.79%

ZBH

Zimmer Biomet Holdings

96.95

-21.05

-17.84%

GMED

Globus Medical

61.25

-5.01

-7.56%

Steris Earnings Call Summary

Earnings Call Date:May 14, 2025

(Q4-2025)

% Change Since: 10.59%|

Next Earnings Date:Aug 11, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong financial performance with significant revenue and earnings growth, record free cash flow, and improved margins in key segments. However, challenges such as a decline in healthcare capital equipment revenue, tariff costs, and legal settlement impacts on cash flow present concerns. Despite these issues, the overall sentiment remains positive due to the outweighing highlights.

Q4-2025 Updates

Positive Updates

Revenue and Earnings Growth

Total as reported revenue grew 4%, and constant currency organic revenue grew 6% in the quarter. Adjusted earnings per diluted share from continuing operations was $2.74, a 40% increase over the prior year.

Record Free Cash Flow

Free cash flow for fiscal 2025 was a record $787 million, well above the full-year guidance, driven by significant working capital improvements.

Healthcare Segment Performance

Healthcare constant currency organic revenue grew 6% for the year with margins improving to 25% due to volume, pricing, and productivity.

AST Segment Growth

Constant currency organic revenue for AST grew 9% for the year with 7% growth in services.

Improved Margins in Life Sciences

Margins in Life Sciences increased to 42.3%, a 360 basis point improvement, due to favorable mix, pricing, and divestiture of the CECS business.

Negative Updates

Healthcare Capital Equipment Revenue Decline

Healthcare capital equipment revenue declined 5% for the year against a record year last year.

Challenges in AST Margins

EBIT margins for AST were 44.8%, down slightly year-over-year due to energy and labor headwinds and a negative mix shift from capital equipment shipments.

Tariff Costs Impact

The fiscal 2026 outlook includes $30 million of tariff costs, impacting the EPS range and reflecting a challenge for the company.

Legal Settlement Impact on Cash Flow

A $40 million legal settlement for ETO in FY 2026 is expected to negatively impact cash flow.

Company Guidance

During STERIS plc's Fourth Quarter 2025 Conference Call, the company provided a comprehensive update on their financial performance and guidance. For Q4, total revenue grew by 4% and constant currency organic revenue increased by 6%, supported by a 210 basis point price rise. Gross margin improved by 170 basis points to 44.3%, while EBIT margin increased by 110 basis points to 24.8% of revenue. The adjusted effective tax rate was 23.5%, and net income from continuing operations reached $270 million, with adjusted earnings per diluted share at $2.74, a 40% increase over the prior year. Fiscal 2025 saw capital expenditures of $370 million and depreciation and amortization of $476 million. The company reduced its debt to $2 billion, achieving a gross debt to EBITDA ratio of approximately 1.4x. Free cash flow hit a record $787 million, surpassing full-year guidance. Looking ahead to fiscal 2026, STERIS expects revenue growth of 6% to 7%, with adjusted EPS anticipated to be between $9.90 and $10.15, reflecting a 7% to 10% growth despite a $30 million tariff cost.

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.