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STERIS (STE) to Report Q1 Earnings: What's in the Cards?
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STERIS plc (STE - Free Report) is scheduled to report first-quarter fiscal 2023 results on Aug 2, following the market close.
In the last reported quarter, the company’s earnings per share of $2.04 beat the Zacks Consensus Estimate by 2%. Moreover, its earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 9.2%.
Let's see how things have shaped up prior to the announcement.
Factors at Play
The Healthcare arm of STERIS has been witnessing a major rebound, with considerable constant currency organic growth during fiscal 2022. STERIS’ Key Surgical and Cantel Medical businesses have been making significant contributions to consumable revenues within the Healthcare arm over the last few quarters. With the more normalized procedure volume through the months of the fiscal first quarter, this uptrend is expected to have continued in Q1.
STERIS recently completed the acquisition of Cantel Medical. The integration 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. This is likely to have benefited the company’s fiscal first-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 fourth quarter.
The Zacks Consensus Estimate for Healthcare revenues is pegged at $726 million, suggesting an increase of 20.4% 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. The continued rebound in procedure volumes reaching the pre-pandemic level in the United States is also expected to have contributed to the to-be-reported quarter, benefiting the AST arm. However, due to the COVID-19 resurgence through the months of fiscal Q1, we are concerned about the impact on volume recovery during the fiscal first quarter.
The Zacks Consensus Estimate for AST revenues is pegged at $244 million, suggesting a rise of 19% 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. The company in this regard noted that procedures have started recovering and the company entered the year with a record backlog from a Capital Equipment perspective. This is likely to have benefited the company’s top line in the fiscal first quarter.
The Zacks Consensus Estimate for Life Sciences revenues is pegged at $135 million, suggesting a rise of 11.6% from the year-ago quarter.
STERIS’ newly-introduced Dental arm revenues were flat in the quarter, impacted by a slower-than-expected recovery in patient volumes. During the fourth-quarter earnings call, the company noted that revenues in the dental segment have likely improved in the first quarter.
The Zacks Consensus Estimate for Dental revenues is pegged at $117 million.
Overall, for fiscal 2023, the company expects an incremental $70 million in extraordinary supply chain and labor inflation costs, above $45 million in fiscal 2022. In addition to the anticipated headwinds from supply chain and inflation, STERIS’ fiscal 2023 operating expenses are expected to be higher with rising spending on travel, sales, and marketing, and other expenses. R&D spending is also anticipated to be higher as we continue to develop and bring new products to our customers. Offsetting those headwinds, to some extent, will be cost synergies from the integration of Cantel, which is expected to be incremental by approximately $50 million from the fiscal 2022 levels. All these are likely to have impact on the company’s to-be-reported quarter’s earnings performance.
Q1 Estimates
The Zacks Consensus Estimate for the company’s first-quarter fiscal 2023 revenues is pegged at $1.23 billion, suggesting an improvement of 26.8% from the year-ago figure.
The Zacks Consensus Estimate for its first-quarter fiscal 2023 EPS of $1.90 suggests a 7.9% 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. This is exactly the case here, as you can see:
Earnings ESP: The company has an Earnings ESP of +1.85%. 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 #1.
Other Stocks to Consider
Here are a few other 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.
BrainsWay’s 2023 earnings growth rate is estimated to be 16.7%. BWAY’s 2023 revenues are expected to growth 17.1% from 2022.
Alcon Inc. (ALC - Free Report) has an Earnings ESP of +5.07% and a Zacks Rank of #2.
Alcon long-term earnings growth rate is estimated at 14.3%. ALC’s earnings yield of 3.41% compares favorably with the industry’s (8.09%).
Glaukos Corporation (GKOS - Free Report) currently has an Earnings ESP of +2.27% and a Zacks Rank of #1. Glaukosis scheduled torelease second-quarter 2022 results on Aug 3.
GKOS’ 2023 earnings growth rate is estimated at 15.2%.
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STERIS (STE) to Report Q1 Earnings: What's in the Cards?
STERIS plc (STE - Free Report) is scheduled to report first-quarter fiscal 2023 results on Aug 2, following the market close.
In the last reported quarter, the company’s earnings per share of $2.04 beat the Zacks Consensus Estimate by 2%. Moreover, its earnings surpassed the consensus estimate in each of the trailing four quarters. The average earnings surprise was 9.2%.
Let's see how things have shaped up prior to the announcement.
Factors at Play
The Healthcare arm of STERIS has been witnessing a major rebound, with considerable constant currency organic growth during fiscal 2022. STERIS’ Key Surgical and Cantel Medical businesses have been making significant contributions to consumable revenues within the Healthcare arm over the last few quarters. With the more normalized procedure volume through the months of the fiscal first quarter, this uptrend is expected to have continued in Q1.
STERIS recently completed the acquisition of Cantel Medical. The integration 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. This is likely to have benefited the company’s fiscal first-quarter sales.
STERIS plc Price and EPS Surprise
STERIS plc price-eps-surprise | STERIS plc Quote
Furthermore, the Healthcare segment is likely to have gained from a record backlog for the legacy STERIS products at the end of the fiscal fourth quarter.
The Zacks Consensus Estimate for Healthcare revenues is pegged at $726 million, suggesting an increase of 20.4% 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. The continued rebound in procedure volumes reaching the pre-pandemic level in the United States is also expected to have contributed to the to-be-reported quarter, benefiting the AST arm. However, due to the COVID-19 resurgence through the months of fiscal Q1, we are concerned about the impact on volume recovery during the fiscal first quarter.
The Zacks Consensus Estimate for AST revenues is pegged at $244 million, suggesting a rise of 19% 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. The company in this regard noted that procedures have started recovering and the company entered the year with a record backlog from a Capital Equipment perspective. This is likely to have benefited the company’s top line in the fiscal first quarter.
The Zacks Consensus Estimate for Life Sciences revenues is pegged at $135 million, suggesting a rise of 11.6% from the year-ago quarter.
STERIS’ newly-introduced Dental arm revenues were flat in the quarter, impacted by a slower-than-expected recovery in patient volumes. During the fourth-quarter earnings call, the company noted that revenues in the dental segment have likely improved in the first quarter.
The Zacks Consensus Estimate for Dental revenues is pegged at $117 million.
Overall, for fiscal 2023, the company expects an incremental $70 million in extraordinary supply chain and labor inflation costs, above $45 million in fiscal 2022. In addition to the anticipated headwinds from supply chain and inflation, STERIS’ fiscal 2023 operating expenses are expected to be higher with rising spending on travel, sales, and marketing, and other expenses. R&D spending is also anticipated to be higher as we continue to develop and bring new products to our customers. Offsetting those headwinds, to some extent, will be cost synergies from the integration of Cantel, which is expected to be incremental by approximately $50 million from the fiscal 2022 levels. All these are likely to have impact on the company’s to-be-reported quarter’s earnings performance.
Q1 Estimates
The Zacks Consensus Estimate for the company’s first-quarter fiscal 2023 revenues is pegged at $1.23 billion, suggesting an improvement of 26.8% from the year-ago figure.
The Zacks Consensus Estimate for its first-quarter fiscal 2023 EPS of $1.90 suggests a 7.9% 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. This is exactly the case here, as you can see:
Earnings ESP: The company has an Earnings ESP of +1.85%. 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 #1.
Other Stocks to Consider
Here are a few other 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.
BrainsWay Ltd. (BWAY - Free Report) has an Earnings ESP of +33.33% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
BrainsWay’s 2023 earnings growth rate is estimated to be 16.7%. BWAY’s 2023 revenues are expected to growth 17.1% from 2022.
Alcon Inc. (ALC - Free Report) has an Earnings ESP of +5.07% and a Zacks Rank of #2.
Alcon long-term earnings growth rate is estimated at 14.3%. ALC’s earnings yield of 3.41% compares favorably with the industry’s (8.09%).
Glaukos Corporation (GKOS - Free Report) currently has an Earnings ESP of +2.27% and a Zacks Rank of #1. Glaukosis scheduled torelease second-quarter 2022 results on Aug 3.
GKOS’ 2023 earnings growth rate is estimated at 15.2%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.