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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 expected to report fourth-quarter fiscal 2022 results on May 11, following the market close.

In the last-reported quarter, the company’s earnings per share (EPS) of $2.12 beat the Zacks Consensus Estimate by 8.7%. Moreover, its earnings surpassed the consensus estimate in three of the trailing four quarters and missed in one. The average earnings surprise was 6.34%.

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

Factors At Play

The Healthcare arm has been witnessing a major rebound, with considerable constant currency organic growth during the first nine months of fiscal 2022. STERIS’ Key Surgical and Cantel Medical businesses have been making significant contributions to consumable revenues within the Healthcare arm over the last three quarters. This trend is expected to have continued in the to-be-reported quarter as well.

In its fiscal third-quarter earnings call, STERIS noted that it made noteworthy progress on the integration of Cantel Medical. The integration is strengthening and expanding STERIS’ Endoscopy offerings, adding a full suite of high-level disinfection consumables, capital equipment and services as well as additional single-use accessories. This is likely to have benefitted the company’s fiscal fourth-quarter sales.

Furthermore, the Healthcare segment is likely to have gained from a record backlog for the legacy STERIS products at the end of the fiscal third quarter.

The Zacks Consensus Estimate for Healthcare revenues is pegged at $735 million, suggesting a surge of 30.8% from the year-ago quarter’s reported figure.

The Applied Sterilization Technologies (AST) arm is anticipated to have gained from increased demand from medical device customers. Meanwhile, considering the drop in COVID-19 cases, a rebound in procedure volumes in the United States is also likely to have contributed in the to-be-reported quarter, benefitting the AST arm. Yet, due to the COVID-19 resurgences, with the recent one being the highly contagious Omicron variant, we are vigilant about the impact on STERIS’ procedure volumes during the fiscal fourth quarter.

STERIS plc Price and EPS Surprise

The Zacks Consensus Estimate for AST revenues is pegged at $211 million, suggesting a rise of 12.2% from the year-ago quarter’s figure.

The Life Sciences segment is likely to have gained from continued growth in capital equipment and service revenues. Notably, during the fiscal second quarter, the capital equipment backlog in Life Sciences continued to grow to a record $117 million in the third quarter. This is likely to have benefitted the company’s top line in the fourth quarter.

The Zacks Consensus Estimate for Life Sciences revenues is pegged at $129 million, suggesting a rise of 4% from the year-ago quarter.

STERIS’ newly-introduced Dental arm revenue was flat in the quarter, impacted by a slower-than-expected recovery in patient volumes. During the third-quarter earnings call, the company noted that revenues in the dental segment have likely improved in the fourth quarter.

The Zacks Consensus Estimate for Dental revenues is pegged at $106 million.

Q4 Estimates

The Zacks Consensus Estimate for the company’s fourth-quarter fiscal 2022 revenues is pegged at $1.18 billion, suggesting an improvement of 35.1% from the year-ago figure.

The Zacks Consensus Estimate for its fourth-quarter fiscal 2022 EPS of $2.00 suggests a 22.7% uptick from the year-ago 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: The company 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 to Consider

Here are a few stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season.

Clovis Oncology (CLVS - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Clovis boasts a mixed track record, having topped earnings estimates in two of the last four quarters and missing in the remaining two. Clovis pulled off a four-quarter earnings surprise of 1.44%, on average.

Vertex (VRTX - Free Report) has an Earnings ESP of +0.87% and a Zacks Rank #2.

Vertex topped earnings estimates in the last four quarters. Vertex delivered a four-quarter earnings surprise of 10.01%, on average.

Jazz Pharmaceuticals (JAZZ - Free Report) has an Earnings ESP of +3.04% and a Zacks Rank #3.

Jazz topped earnings estimates in the last four quarters. Jazz delivered a four-quarter earnings surprise of 14.5%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.