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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on STE

STERIS plc's recent performance was driven by strong Q2 results, with earnings and revenue beats, margin expansion, and a raised 2026 EPS outlook. Total revenue grew 10% to $1.5 billion, with constant currency organic revenue growth of 9%. Gross margin increased 60 basis points to 44.3%. The company's adjusted EPS increased to $2.47, beating the Zacks Consensus Estimate of $2.38. STERIS also raised its fiscal 2026 constant currency organic revenue, EPS, and free cash flow outlook. Institutional investors, such as Ethic Inc., have increased their stakes in the company.

1.c. Company Highlights

2. STERIS plc's Strong 2Q FY2026 Earnings Beat Expectations

STERIS plc reported a robust 2Q Fiscal 2026 earnings, with total as-reported revenue growing 10% and constant currency organic revenue growing 9%. Gross margin increased 60 basis points to 44.3%, driven by positive price and productivity. EBIT margin expanded 90 basis points to 23.1% of revenue, mainly driven by operating expense leverage. Net income from continuing operations was $244.5 million, and adjusted earnings per diluted share were $2.47, a 15% increase over the prior year, beating analyst estimates of $2.38. The company's strong financial performance was across the board, with all segments contributing to the growth.

Publication Date: Nov -07

📋 Highlights
  • Revenue & Margin Growth:: Total revenue up 10% (10% as-reported, 9% organic), gross margin rose 60 bps to 44.3%, EBIT margin increased 90 bps to 23.1%.
  • Adjusted Earnings:: Net income from continuing operations reached $244.5M, adjusted EPS grew 15% to $2.47.
  • Segment Performance:: Healthcare organic revenue up 9% (services +13%, consumables +10%), Life Sciences +12%, AST +7% (services +13% offset by capital equipment declines).
  • Outlook Raised:: Fiscal 2026 guidance increased to 8-9% as-reported revenue growth (7-8% organic), EBIT margin expected to improve 10-20 bps.
  • Free Cash Flow:: Outlook raised by $30M to $850M, driven by earnings and working capital efficiency in H1.

Segment Performance

The company's segments performed well, with Healthcare constant currency organic revenue growing 9%, driven by volume and price. Service revenue grew 13%, and consumables grew 10%. Healthcare capital equipment revenue increased 4%, with a backlog of over $400 million. AST constant currency organic revenue grew 7%, with 13% growth in services, offset by declines in capital equipment revenue. Life Sciences constant currency organic revenue grew 12%, driven by a return of capital equipment shipments.

Outlook and Guidance

The company increased its outlook for Fiscal 2026, expecting approximately 8% to 9% as-reported revenue growth, with constant currency organic revenue growth of 7% to 8%. EBIT margins are expected to improve 10 to 20 basis points, and the effective tax rate is expected to increase by 50 basis points to approximately 24%. Free cash flow outlook was increased by $30 million to $850 million, driven by earnings and improvements in working capital. Analysts estimate next year's revenue growth at 8.3%.

Valuation

STERIS plc's current valuation metrics indicate a premium, with a P/E Ratio of 37.16 and an EV/EBITDA of 18.89. The company's ROE is 10.21%, and ROIC is 7.77%. The Dividend Yield is 0.9%, and Free Cash Flow Yield is 3.75%. These metrics suggest that the market has high expectations for the company's future growth, which is largely already priced in.

Management Insights

On the call, management discussed the strong performance of the service business in Healthcare, driven by volume and price. They also noted that the trend of single-use scopes has not lived up to high expectations but is still a growing area, with Daniel Carestio stating that single-use scopes have a place, especially for small diameter scopes. The company's capacity expansion plans were also discussed, with a focus on expanding capacity in the AST segment.

3. NewsRoom

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Should You Hold STERIS Stock in Your Portfolio for Now?

Dec -04

Source:

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STERIS plc $STE Shares Purchased by Groupe la Francaise

Dec -04

Source: defenseworld.net

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STERIS (NYSE:STE) & iRadimed (NASDAQ:IRMD) Head to Head Comparison

Dec -03

Source: defenseworld.net

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Steris (STE) Upgraded to Buy: Here's Why

Nov -20

Source: zacks.com

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Steris PLC (STE) Q2 2026 Earnings Call Highlights: Strong Revenue Growth and Improved Margins Amid Challenges

Nov -06

Source: gurufocus.com

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STERIS plc (STE) Q2 2026 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

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STE Stock Gains on Q2 Earnings and Revenue Beat, '26 EPS View Up

Nov -06

Source: zacks.com

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Here's What Key Metrics Tell Us About Steris (STE) Q2 Earnings

Nov -06

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.00%)

6. Segments

Healthcare

Expected Growth: 6.5%

As a fundamental segment, its growth is slightly above the global average due to the consistent demand for healthcare services and the potential for increased healthcare spending. This aligns with the global growth hypothesis, reflecting steady demand.

Applied Sterilization Technologies(AST)

Expected Growth: None%

None

Life Sciences

Expected Growth: 6.8%

The life sciences segment benefits from the growing demand for pharmaceuticals and biotech products. Its growth is slightly above the global average due to the increasing need for sterile and reliable manufacturing environments.

7. Detailed Products

Sterilization Systems

STERIS plc provides a range of sterilization systems, including steam sterilizers, ethylene oxide sterilizers, and hydrogen peroxide gas plasma sterilizers, designed to meet the specific needs of hospitals, pharmaceutical companies, and research institutions.

Infection Prevention Technologies

STERIS plc offers a range of infection prevention technologies, including UV light disinfection systems, automated room disinfection systems, and surface disinfection systems, designed to reduce the risk of healthcare-associated infections.

Endoscopy Reprocessing

STERIS plc provides a range of endoscopy reprocessing systems, including automated endoscope reprocessors and endoscope drying cabinets, designed to ensure the safe and effective reprocessing of endoscopes.

Pharmaceutical Processing Equipment

STERIS plc offers a range of pharmaceutical processing equipment, including bioreactors, fermentation systems, and purification systems, designed to support the development and manufacturing of pharmaceuticals and biologics.

Laboratory and Medical Equipment

STERIS plc provides a range of laboratory and medical equipment, including autoclaves, centrifuges, and microscopes, designed to support research, development, and patient care.

Service and Maintenance

STERIS plc offers a range of service and maintenance programs, including equipment maintenance, validation, and calibration, designed to ensure the optimal performance and compliance of equipment.

8. STERIS plc's Porter Forces

Forces Ranking

Threat Of Substitutes

STERIS plc operates in a niche market with high barriers to entry, reducing the threat of substitutes. However, the company's dependence on a few large customers increases the risk of substitution.

Bargaining Power Of Customers

STERIS plc's customers, primarily hospitals and healthcare facilities, have significant bargaining power due to their large purchasing volumes and ability to negotiate prices.

Bargaining Power Of Suppliers

STERIS plc's suppliers, primarily manufacturers of medical equipment and consumables, have limited bargaining power due to the company's large purchasing volumes and diversified supply chain.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the medical equipment and consumables market, including regulatory hurdles and significant capital requirements.

Intensity Of Rivalry

The medical equipment and consumables market is moderately competitive, with a few large players competing for market share. However, STERIS plc's strong brand reputation and diversified product portfolio help to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.07%
Debt Cost 3.95%
Equity Weight 66.93%
Equity Cost 7.95%
WACC 6.63%
Leverage 49.41%

11. Quality Control: STERIS plc passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Yield: 3.8

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STERIS

A-Score: 5.2/10

Value: 2.0

Growth: 6.6

Quality: 6.5

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A-Score: 3.5/10

Value: 2.4

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Yield: 6.9

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

263.28$

Current Price

263.28$

Potential

-0.00%

Expected Cash-Flows