Back to top

Image: Bigstock

STERIS (STE) to Report Q1 Earnings: What's in the Cards?

Read MoreHide Full Article

STERIS plc (STE - Free Report) is expected to report first-quarter fiscal 2022 results on Aug 2, after market close.

In the last-reported quarter, the company’s earnings per share (EPS) of $1.63 lagged the Zacks Consensus Estimate by 9.4%. Moreover, its earnings surpassed the consensus estimate in three of the trailing four quarters and missed in one. The average earnings surprise was 13.97%.

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

Factors at Play

Healthcare

Since the Key Surgical buyout at 2020-end, STERIS’ biggest segment — Healthcare — has been witnessing a robust increase in consumable revenues. The positive impact of the buyout is likely to have continued through the to-be-reported quarter, thereby driving Healthcare revenues.

In February 2021, STERIS acquired Cantel Medical. The integration has strengthened and expanded STERIS’ Endoscopy offerings, adding a full suite of high-level disinfection consumables, capital equipment and services as well as additional single-use accessories. We believe Cantel Medical has made significant full-quarter contribution to STERIS’ fiscal first-quarter revenues.

During the fiscal fourth-quarter earnings call, STERIS noted that the addition of Key Surgical and Cantel Medical will drive revenues and profitability growth across STERIS’ business. We expect this to get reflected in the to-be-reported quarter’s results.

STERIS plc Price and EPS Surprise

The Zacks Consensus Estimate for Healthcare revenues is pegged at $564 million, suggesting a surge of 107.4% from the year-ago quarter’s reported figure.

Applied Sterilization Technologies (“AST”)

Within AST, increased demand from the company’s core medical device customers is expected to have pumped up sales. Despite a global decline in healthcare procedure volumes, we expect continued growth in the AST arm on robust demand for COVID-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 through the fiscal first quarter, thus significantly contributing to the top line.

The Zacks Consensus Estimate for AST revenues is pegged at $183 million, suggesting a rise of 20.4% from the year-ago quarter’s reported figure.

Life Sciences

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

During the fiscal first quarter, capital equipment 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 revenues.

The Zacks Consensus Estimate for Life Sciences revenues is pegged at $119 million, suggesting a rise of 38.4% from the year-ago quarter.

Q1 Estimates

The Zacks Consensus Estimate for first-quarter fiscal 2022 revenues is pegged at $857.8 million, suggesting an improvement of 28.2% from the year-ago reported figure.

The Zacks Consensus Estimate for the company’s first-quarter fiscal 2022 EPS of $1.50 suggests a 14.5% 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.

Hill-Rom Holdings, Inc. (HRC - Free Report) has an Earnings ESP of +0.56% and a Zacks Rank #2, currently. The stock is slated to release third-quarter fiscal 2021 results on Jul 30.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Henry Schein, Inc. (HSIC - Free Report) has an Earnings ESP of +0.91% and a Zacks Rank of 2, at present. The stock is expected to release second-quarter 2021 results on Aug 3.

Laboratory Corporation of America Holdings (LH - Free Report) has an Earnings ESP of +6.53% and a Zacks Rank of 2, at present. The company is scheduled to release second-quarter 2021 results on Jul 29.