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STERIS (STE) to Report Q4 Earnings: What's in the Cards?

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STERIS plc (STE - Free Report) is slated to report fourth-quarter and full-year fiscal 2021 results on May 18, after market close.

In the last-reported quarter, the company’s earnings per share (EPS) of $1.73 surpassed the Zacks Consensus Estimate by 10.9%. Moreover, its earnings surpassed the consensus estimate in each of the last four quarters. The trailing four-quarter average earnings surprise was 17.44%.

Let's see how things have shaped up prior to the announcement.

Factors at Play

Over the past few months, STERIS has been registering improvement in its business on the back of strength in its operating arms. Although the company is expected to have continued with its momentum in the fourth quarter of fiscal 2021, emergence of the new strain of the coronavirus along with a surge of infections, looms large on the company’s top line.

STERIS plc Price and EPS Surprise


STERIS plc Price and EPS Surprise

STERIS plc price-eps-surprise | STERIS plc Quote

In this regard, we note that in the last-reported quarter, STERIS’ biggest segment — Healthcare — witnessed an encouraging performance on the back of lower operating expenses due to business disruptions from COVID-19 and the favorable impact from the Key Surgical buyout. The positive impact of the buyout is likely to have continued during the to-be-reported quarter as well, thereby driving up the segmental revenues.

Within Applied Sterilization Technologies (“AST”), increased demand from the company’s core medical device customers are expected to have pumped up sales. With the pandemic-led change in market behavior, we expect continued growth in the AST arm on the back of robust demand for COVID-19-related single-use products such as personal protective equipment and COVID-19-testing materials, along with components used in vaccine manufacturing and packaging. This steady demand is likely to have continued during the fiscal fourth quarter, thus significantly contributing to the top line.

Within Life Sciences, amid the pandemic scenario, the company might have continued to benefit from pharma customers on growing vaccines and consumable revenue growth in the fiscal fourth quarter.

Capital equipment shipments declined in the last-reported quarter due to order-timing on a year-over-year basis. However, the quarter’s orders remained strong and backlog at the end of the quarter was at record levels. STERIS is expected to have gained from this order backlog in the to-be-reported quarter, thus driving the revenues.

STERIS has rallied 0.5% against the industry’s 5.9% fall and the S&P 500's 5.9% rise between the period from January to March 2021 despite challenges posed by the pandemic.

Preliminary Results

Per the preliminary results released in April, STERIS expects fiscal 2021’s reported revenue growth of around 3% to $3.1 billion over fiscal 2020. The Zacks Consensus Estimate for the same is currently pegged at $3.11 billion.

Constant currency organic revenue was slightly higher than fiscal 2020’s 9.8%.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter fiscal 2021 revenues is pegged at $879.9 million, suggesting an improvement of 6.9% from the year-ago reported figure.

The Zacks Consensus Estimate for the company’s fourth-quarter fiscal 2021 EPS of $1.80 cents suggests 9.8% uptick from the year-ago reported figure.

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 higher chances of beating estimates. However, this is not the case here as you can see:

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 a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.

The Cooper Companies, Inc. (COO - Free Report) has an Earnings ESP of +2.72% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Centogene N.V. (CNTG - Free Report) has an Earnings ESP of +49.15% and a Zacks Rank of 2, at present.

Brainsway Ltd. Sponsored ADR (BWAY - Free Report) has an Earnings ESP of +28.00% and is a Zacks #2 Ranked stock.

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