Steris (STE) AI Stock Analysis

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Steris

(NYSE:STE)

Rating:80Outperform

Price Target:

$279.00

▲(14.54%Upside)

Steris is positioned strongly in the medical devices industry with commendable financial performance and positive earnings call highlights. The technical indicators support a bullish outlook, albeit with valuation concerns due to a high P/E ratio. Overall, the stock shows a favorable growth trajectory but with certain risks that warrant attention.

Positive Factors

Investor Sentiment

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

Market Position

STE benefits from its position as the second-largest U.S. platform for EO sterilization, presenting a favorable competitive backdrop.

Revenue Growth

In FY26, a favorable foreign exchange tailwind is expected to boost revenue growth above consensus estimates.

Negative Factors

Financial Stability

EO litigation is a significant factor influencing the company's financial stability.

Healthcare Policy

Healthcare policy changes could disrupt STE's business with potential losses in insurance coverage impacting procedure volumes.

Macro and Political Risks

Macro and political uncertainties are expected to slow down revenue growth in FY27 compared to consensus forecasts.

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

Market Cap

$23.94B

Dividend Yield0.92%

Average Volume (3M)719.60K

Price to Earnings (P/E)39.2

Beta (1Y)0.56

Revenue Growth0.32%

EPS Growth62.82%

CountryUS

Employees18,000

SectorHealthcare

Sector Strength41

IndustryMedical - Devices

Share Statistics

EPS (TTM)2.74

Shares Outstanding98,372,310

10 Day Avg. Volume529,544

30 Day Avg. Volume719,595

Financial Highlights & Ratios

PEG Ratio1.24

Price to Book (P/B)3.64

Price to Sales (P/S)0.00

P/FCF Ratio30.85

Enterprise Value/Market Cap1.00

Enterprise Value/Revenue1.11

Enterprise Value/Gross Profit9.71

Enterprise Value/Ebitda4.53

Forecast

1Y Price Target

$265.83

Price Target Upside9.13% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

Steris Business Overview & Revenue Model

Company DescriptionSteris plc is a leading provider of infection prevention and other procedural products and services, primarily serving the healthcare, pharmaceutical, and medical device industries. The company operates in sectors including healthcare, life sciences, and applied sterilization technologies, offering a broad range of solutions such as sterilization systems, surgical and infection prevention products, and cleaning and decontamination services.

How the Company Makes MoneySteris makes money through a diversified revenue model that encompasses various streams. Primarily, the company generates revenue by selling its wide array of infection prevention and sterilization products, such as sterilizers, washers, and other related equipment, to hospitals, surgery centers, and other medical facilities. Additionally, Steris offers comprehensive service contracts for maintenance and repair of its equipment, which provides a steady stream of recurring revenue. The company also provides outsourced contract sterilization services for medical device and pharmaceutical manufacturers, leveraging its extensive network of advanced sterilization facilities. Strategic partnerships and long-term agreements with healthcare providers and pharmaceutical companies further enhance its financial stability and growth potential.

Steris Earnings Call Summary

Earnings Call Date:May 14, 2025

(Q4-2025)

% Change Since: 7.07%|

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.

Steris Financial Statement Overview

Summary

Steris exhibits strong financial performance with robust revenue growth, improved profitability margins, and solid cash flow metrics. While the balance sheet is well-managed, the rising debt levels need monitoring.

Income Statement

Very Positive

Steris has shown robust revenue growth with a notable increase in total revenue from $3.11 billion in 2021 to $5.46 billion in 2025, reflecting strong market demand and effective operational strategies. The gross profit margin remains consistently strong, indicating efficient cost management. Net profit margin has improved significantly over the years, particularly evident in 2025, enhancing overall profitability. EBITDA margin and EBIT margin are also solid, supporting the company's operational efficiency and profitability trajectory.

Balance Sheet

Positive

Steris exhibits a sound balance sheet with a healthy equity base and a moderate debt-to-equity ratio, reflecting prudent financial management. The equity ratio is strong, indicating a stable capital structure. Return on Equity (ROE) has shown improvement, suggesting enhanced profitability and effective use of equity capital. However, the increase in total debt over the years could pose a potential risk if not managed carefully.

Cash Flow

Very Positive

The company demonstrates strong cash flow generation capabilities with a consistent rise in operating cash flow. Free cash flow has increased notably, supporting future investments and debt servicing. The operating cash flow to net income ratio indicates efficient cash generation relative to earnings. While free cash flow growth is positive, fluctuations in capital expenditures and investing cash flow need monitoring.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
5.46B	5.14B	4.96B	4.59B	3.11B
	Gross Profit
2.40B	2.24B	2.16B	2.02B	1.34B
	EBIT
866.64M	836.12M	268.19M	425.62M	323.30M
	EBITDA
866.64M	1.41B	1.34B	957.20M	800.33M
	Net Income Common Stockholders
614.64M	378.24M	107.03M	243.89M	397.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
171.70M	207.02M	208.36M	348.32M	220.53M
	Total Assets
10.15B	11.06B	10.82B	11.45B	6.57B
	Total Debt
2.04B	3.38B	3.02B	3.12B	1.65B
	Net Debt
1.87B	3.18B	2.81B	2.78B	1.43B
	Total Liabilities
3.53B	4.75B	4.73B	4.91B	2.68B
	Stockholders Equity
6.62B	6.30B	6.09B	6.54B	3.89B
Cash Flow		Free Cash Flow
778.00M	612.95M	394.98M	397.25M	450.38M
	Operating Cash Flow
1.15B	973.27M	756.95M	684.81M	689.64M
	Investing Cash Flow
388.77M	-887.36M	-383.33M	-666.56M	-1.15B
	Financing Cash Flow
-1.57B	-85.19M	-498.72M	115.83M	345.62M

Steris Technical Analysis

Technical Analysis Sentiment

Positive

Last Price243.58

Price Trends

50DMA

229.90

Positive

100DMA

225.48

Positive

200DMA

224.48

Positive

Market Momentum

MACD

4.19

Positive

RSI

58.11

Neutral

STOCH

37.04

Neutral

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 243.58 is above the 20-day moving average (MA) of 241.56, above the 50-day MA of 229.90, and above the 200-day MA of 224.48, indicating a bullish trend. The MACD of 4.19 indicates Positive momentum. The RSI at 58.11 is Neutral, neither overbought nor oversold. The STOCH value of 37.04 is Neutral, 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 2 New Risks

Item 2. Unregistered sales of equity securities, use of proceeds, and issuer purchases of equity securities Q4, 2024

Item 5. Other information Q4, 2024

Steris Peers Comparison

Overall Rating

UnderperformOutperform

Sector (54)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DXCM	81 Outperform	$34.03B	64.27	23.72%	―	9.11%	-17.87%
SNN	80 Outperform	$12.86B	32.10	7.82%	2.46%	4.58%	55.99%
STE	80 Outperform	$23.94B	39.22	9.46%	0.92%	0.32%	62.82%
PODD	76 Outperform	$22.46B	57.08	37.92%	―	23.49%	71.25%
ZBH	70 Outperform	$18.10B	20.37	7.31%	1.05%	3.30%	-2.39%
GMED	68 Neutral	$8.08B	44.54	4.63%	―	32.26%	112.87%
Sector *	54 Neutral	$5.28B	3.29	-45.38%	2.80%	16.77%	-0.08%

* Healthcare Sector Average

Performance Comparison

STE

Steris

243.58

18.96

8.44%

DXCM

Dexcom

85.74

-30.05

-25.95%

PODD

Insulet

317.16

125.74

65.69%

SNN

Smith & Nephew Snats

30.30

4.61

17.94%

ZBH

Zimmer Biomet Holdings

91.92

-20.42

-18.18%

GMED

Globus Medical

59.55

-5.57

-8.55%

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.