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Why Is STERIS (STE) Up 3.5% Since the Last Earnings Report?
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It has been about a month since the last earnings report for STERIS PLC (STE - Free Report) . Shares have added about 3.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
STERIS Plc (STE - Free Report) reported fourth-quarter fiscal 2017 adjusted earnings per share (EPS) of $1.11, up 23.3% from the year-ago quarter. The adjusted EPS figure also surpassed the Zacks Consensus Estimate of $1.07.
For the full year, the adjusted EPS was $3.76, up 10.9%. It also outpaced the Zacks Consensus Estimate of $3.73.
Revenues in Details
STERIS generated revenues of $681.2 million, down 1.3% year over year. The top line, however, surpassed the Zacks Consensus Estimate of $666 million. The year-over-year decline was a result of foreign currency fluctuations and divested businesses. Organic revenue growth at constant currency was 7% year over year, primarily driven by higher volumes and rising prices.
For full-year 2017, revenues increased 17% year over year to $2.61 billion, or 5% on a constant currency basis.
The company operates through four segments: Healthcare Products, Healthcare Specialty Services, Applied Sterilization Technologies and Life Sciences.
Revenues from the Healthcare Products segment climbed 5% year over year to $351.4 million in the reported quarter. Organic revenues were up 7% mainly owing to 12% growth in capital equipment and 4% rise in service revenues. This was partially offset by a 4% drop in consumable revenues due to divestitures.
Revenues from the Healthcare Specialty Services segment declined 21% to $126.0 million on a reported basis due to divestitures. However, organic revenues grew 8% reflecting growth at IMS and the legacy Synergy CSD outsourcing business in Europe.
On the other hand, revenues from Applied Sterilization Technologies improved 4.8% to $115.7 million and organic revenue growth was 7%. This was driven by strong underlying demand from core medical device customers.
Lastly, revenues from the Life Sciences segment increased 1% to $86.3 million in the quarter, as 5% growth in consumable revenues was offset by a 2% decrease in capital equipment revenues and 1% drop in service revenues. On an organic basis, revenues increased 2% year over year.
Margins
Adjusted gross margin improved 289 basis points (bps) year over year to 41.1% in the reported quarter. The expansion in gross margin was on account of the positive impact of divested businesses, favorable foreign currency, cost synergies and pricing, partially offset by unfavorable product mix.
STERIS witnessed a 37.1% year-over-year increase in selling, general and administrative expenses to $205.7 million. Also, research and development expenses rose 10.1% to $15.8 million. Adjusted operating margin contracted 581 bps on a year-over-year basis to 8.6% in the reported quarter.
Financial Details
STERIS exited fiscal 2017 with cash and cash equivalents of $282.9 million, compared with $248.8 million at the end of fiscal 2016. The company had long-term debt of $1.48 billion at the end of fiscal 2017, compared with $1.55 billion at the end of fiscal 2016. The company generated $424.1 million in cash flow from operations in fiscal 2017, up 66.5% from fiscal 2016.
2018 Guidance
STERIS expects revenues to decline 2%–3% in fiscal 2018 from the prior fiscal. This is because of the impact of divested businesses and foreign currency movements.
The company also projects fiscal 2018 adjusted EPS in the band of $3.96–$4.09.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, STERIS' stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.
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Why Is STERIS (STE) Up 3.5% Since the Last Earnings Report?
It has been about a month since the last earnings report for STERIS PLC (STE - Free Report) . Shares have added about 3.5% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
STERIS Tops Q4 Earnings & Revenues, Issues '18 View
STERIS Plc (STE - Free Report) reported fourth-quarter fiscal 2017 adjusted earnings per share (EPS) of $1.11, up 23.3% from the year-ago quarter. The adjusted EPS figure also surpassed the Zacks Consensus Estimate of $1.07.
For the full year, the adjusted EPS was $3.76, up 10.9%. It also outpaced the Zacks Consensus Estimate of $3.73.
Revenues in Details
STERIS generated revenues of $681.2 million, down 1.3% year over year. The top line, however, surpassed the Zacks Consensus Estimate of $666 million. The year-over-year decline was a result of foreign currency fluctuations and divested businesses. Organic revenue growth at constant currency was 7% year over year, primarily driven by higher volumes and rising prices.
For full-year 2017, revenues increased 17% year over year to $2.61 billion, or 5% on a constant currency basis.
The company operates through four segments: Healthcare Products, Healthcare Specialty Services, Applied Sterilization Technologies and Life Sciences.
Revenues from the Healthcare Products segment climbed 5% year over year to $351.4 million in the reported quarter. Organic revenues were up 7% mainly owing to 12% growth in capital equipment and 4% rise in service revenues. This was partially offset by a 4% drop in consumable revenues due to divestitures.
Revenues from the Healthcare Specialty Services segment declined 21% to $126.0 million on a reported basis due to divestitures. However, organic revenues grew 8% reflecting growth at IMS and the legacy Synergy CSD outsourcing business in Europe.
On the other hand, revenues from Applied Sterilization Technologies improved 4.8% to $115.7 million and organic revenue growth was 7%. This was driven by strong underlying demand from core medical device customers.
Lastly, revenues from the Life Sciences segment increased 1% to $86.3 million in the quarter, as 5% growth in consumable revenues was offset by a 2% decrease in capital equipment revenues and 1% drop in service revenues. On an organic basis, revenues increased 2% year over year.
Margins
Adjusted gross margin improved 289 basis points (bps) year over year to 41.1% in the reported quarter. The expansion in gross margin was on account of the positive impact of divested businesses, favorable foreign currency, cost synergies and pricing, partially offset by unfavorable product mix.
STERIS witnessed a 37.1% year-over-year increase in selling, general and administrative expenses to $205.7 million. Also, research and development expenses rose 10.1% to $15.8 million. Adjusted operating margin contracted 581 bps on a year-over-year basis to 8.6% in the reported quarter.
Financial Details
STERIS exited fiscal 2017 with cash and cash equivalents of $282.9 million, compared with $248.8 million at the end of fiscal 2016. The company had long-term debt of $1.48 billion at the end of fiscal 2017, compared with $1.55 billion at the end of fiscal 2016. The company generated $424.1 million in cash flow from operations in fiscal 2017, up 66.5% from fiscal 2016.
2018 Guidance
STERIS expects revenues to decline 2%–3% in fiscal 2018 from the prior fiscal. This is because of the impact of divested businesses and foreign currency movements.
The company also projects fiscal 2018 adjusted EPS in the band of $3.96–$4.09.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
STERIS PLC Price and Consensus
STERIS PLC Price and Consensus | STERIS PLC Quote
VGM Scores
At this time, STERIS' stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'F'. However, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.