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STERIS (STE) Set to Post Q1 Earnings: What's in the Cards?
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STERIS plc (STE - Free Report) is set to release first-quarter fiscal 2024 results on Aug 2 before the opening bell.
The company posted adjusted earnings per share (EPS) of $2.30 in the last reported quarter, which beat the Zacks Consensus Estimate by 6.98%. STERIS beat earnings estimates in one of the trailing four quarters, missed the same in two and was break-even in one, the average negative surprise being 0.63%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Healthcare
The Healthcare arm of STERIS is likely to have generated strong organic revenues in the first quarter of fiscal 2024, as witnessed during the previous quarter’s months. The performance is expected to have witnessed high-teens growth in capital equipment and an improvement in consumables and service revenues.
With the easing of supply-chain issues, STE reported a sequential improvement, with an additional $50 million of capital equipment shipments in the fiscal fourth quarter. However, despite growth, STERIS’ healthcare backlog stayed at nearly $500 million. Capital equipment orders for the quarter represented 50% of the large projects, which tend to have longer lead times. We expect STERIS to have a strong fiscal first quarter in terms of healthcare capital shipments.
Our model projects the segment’s revenues for the fiscal first quarter to improve 5.8% year over year to $739.2 million.
Similar to the last reported quarter, the performance of this segment is likely to be driven by solid underlying demand from core medical device customers. Meanwhile, we expect the reduced demand for single-use bioprocessing disposables is likely to follow in the fiscal 2024 first quarter also.
On the last earnings call, management noted that the sequential growth in demand is likely to return in the second half of fiscal 2024, while year-over-year growth is not anticipated until fiscal 2025. Per our model, the projected revenues of the AST segment for the fiscal first quarter stand at $224.4 million, an improvement of 1.6% year over year.
Life Sciences
In the fiscal first quarter of 2024, we expect the Life Science segment to have benefitted from an improvement in consumable revenues, capital equipment revenues and service revenues. The company had a record quarter of capital shipments last time due to the execution of a delayed capital shipment of about $10 million.
On the consumable side, STERIS had a strong finish in fiscal 2023, having worked through supply-chain challenges, including more normalized shipping to the Asia Pacific. Growth in service revenues for the year was backed by solid performance and equipment maintenance and the installation of new capital equipment. We believe the company is likely to have benefitted from all these trends in the fiscal first quarter.
Our model projects the segment’s revenues for the fiscal first quarter to decline 2.8% year over year to $128.5 million.
At the end of fiscal 2023, Life Science’s capital equipment backlog remained at just more than $100 million. While we expect the company to return to the normal cadence of shipments in the latter part of fiscal 2024, they may not have fully materialized in the fiscal first-quarter months.
Dental
We expect the Dental business is likely to post lower or flat organic revenues in the fiscal first quarter of 2024 similar to the last reported one. On the quarter’s earnings call, management noted that procedure volumes remained at nearly 95% of pre-pandemic levels due to broader economic pressures impacting consumer spending.
Per our model, the projected revenues of the Dental segment for the fiscal first quarter stand at $99.9 million, indicating a year-over-year decline of 4.7%.
Q1 Estimates
The Zacks Consensus Estimate for STERIS’ first quarter fiscal 2024 revenues is pegged at $1.19 billion. This suggests an increase of 3.1% from the year-ago reported figure.
The Zacks Consensus Estimate for its first-quarter fiscal 2024 EPS of $1.86 indicates a year-over-year decline of 2.1%
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates, which is not the case here.
Earnings ESP: STERIS has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this time:
MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, with the average surprise being 4.48%. The Zacks Consensus Estimate for Mckesson’s fiscal 2024 first-quarter EPS is expected to rise 0.5% from the year-ago reported figure.
Zimmer Biomet (ZBH - Free Report) has an Earnings ESP of +2.34% and a Zacks Rank #2. The company is scheduled to release second-quarter 2023 results on Aug 1.
ZBH’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 7.38%. The Zacks Consensus Estimate for Zimmer Biomet’s second-quarter EPS is expected to be in line with the year-ago reported figure.
AmerisourceBergen currently has an Earnings ESP of +0.86% and a Zacks Rank #2. ABC is scheduled to release third-quarter fiscal 2023 results on Aug 2.
The company’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 3.14%. The Zacks Consensus Estimate for ABC’s fiscal 2023 third-quarter EPS is expected to improve 5.6% from the year-ago reported figure.
Image: Shutterstock
STERIS (STE) Set to Post Q1 Earnings: What's in the Cards?
STERIS plc (STE - Free Report) is set to release first-quarter fiscal 2024 results on Aug 2 before the opening bell.
The company posted adjusted earnings per share (EPS) of $2.30 in the last reported quarter, which beat the Zacks Consensus Estimate by 6.98%. STERIS beat earnings estimates in one of the trailing four quarters, missed the same in two and was break-even in one, the average negative surprise being 0.63%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Healthcare
The Healthcare arm of STERIS is likely to have generated strong organic revenues in the first quarter of fiscal 2024, as witnessed during the previous quarter’s months. The performance is expected to have witnessed high-teens growth in capital equipment and an improvement in consumables and service revenues.
With the easing of supply-chain issues, STE reported a sequential improvement, with an additional $50 million of capital equipment shipments in the fiscal fourth quarter. However, despite growth, STERIS’ healthcare backlog stayed at nearly $500 million. Capital equipment orders for the quarter represented 50% of the large projects, which tend to have longer lead times. We expect STERIS to have a strong fiscal first quarter in terms of healthcare capital shipments.
Our model projects the segment’s revenues for the fiscal first quarter to improve 5.8% year over year to $739.2 million.
STERIS plc Price and EPS Surprise
STERIS plc price-eps-surprise | STERIS plc Quote
Applied Sterilization Technologies (AST)
Similar to the last reported quarter, the performance of this segment is likely to be driven by solid underlying demand from core medical device customers. Meanwhile, we expect the reduced demand for single-use bioprocessing disposables is likely to follow in the fiscal 2024 first quarter also.
On the last earnings call, management noted that the sequential growth in demand is likely to return in the second half of fiscal 2024, while year-over-year growth is not anticipated until fiscal 2025. Per our model, the projected revenues of the AST segment for the fiscal first quarter stand at $224.4 million, an improvement of 1.6% year over year.
Life Sciences
In the fiscal first quarter of 2024, we expect the Life Science segment to have benefitted from an improvement in consumable revenues, capital equipment revenues and service revenues. The company had a record quarter of capital shipments last time due to the execution of a delayed capital shipment of about $10 million.
On the consumable side, STERIS had a strong finish in fiscal 2023, having worked through supply-chain challenges, including more normalized shipping to the Asia Pacific. Growth in service revenues for the year was backed by solid performance and equipment maintenance and the installation of new capital equipment. We believe the company is likely to have benefitted from all these trends in the fiscal first quarter.
Our model projects the segment’s revenues for the fiscal first quarter to decline 2.8% year over year to $128.5 million.
At the end of fiscal 2023, Life Science’s capital equipment backlog remained at just more than $100 million. While we expect the company to return to the normal cadence of shipments in the latter part of fiscal 2024, they may not have fully materialized in the fiscal first-quarter months.
Dental
We expect the Dental business is likely to post lower or flat organic revenues in the fiscal first quarter of 2024 similar to the last reported one. On the quarter’s earnings call, management noted that procedure volumes remained at nearly 95% of pre-pandemic levels due to broader economic pressures impacting consumer spending.
Per our model, the projected revenues of the Dental segment for the fiscal first quarter stand at $99.9 million, indicating a year-over-year decline of 4.7%.
Q1 Estimates
The Zacks Consensus Estimate for STERIS’ first quarter fiscal 2024 revenues is pegged at $1.19 billion. This suggests an increase of 3.1% from the year-ago reported figure.
The Zacks Consensus Estimate for its first-quarter fiscal 2024 EPS of $1.86 indicates a year-over-year decline of 2.1%
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates, which is not the case here.
Earnings ESP: STERIS has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this time:
Mckesson (MCK - Free Report) has an Earnings ESP of +1.93% and a Zacks Rank #2. The company will release first-quarter fiscal 2024 results on Aug 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
MCK’s earnings surpassed estimates in three of the trailing four quarters and missed the same once, with the average surprise being 4.48%. The Zacks Consensus Estimate for Mckesson’s fiscal 2024 first-quarter EPS is expected to rise 0.5% from the year-ago reported figure.
Zimmer Biomet (ZBH - Free Report) has an Earnings ESP of +2.34% and a Zacks Rank #2. The company is scheduled to release second-quarter 2023 results on Aug 1.
ZBH’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 7.38%. The Zacks Consensus Estimate for Zimmer Biomet’s second-quarter EPS is expected to be in line with the year-ago reported figure.
AmerisourceBergen currently has an Earnings ESP of +0.86% and a Zacks Rank #2. ABC is scheduled to release third-quarter fiscal 2023 results on Aug 2.
The company’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 3.14%. The Zacks Consensus Estimate for ABC’s fiscal 2023 third-quarter EPS is expected to improve 5.6% from the year-ago reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.