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STERIS (STE) to Report Q2 Earnings: What's in the Cards?
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STERIS plc (STE - Free Report) is expected to report second-quarter fiscal 2023 results shortly.
In the last reported quarter, the company’s earnings per share of $1.90 were in line with the Zacks Consensus Estimate. Its earnings surpassed the consensus estimate in three of the trailing four quarters and came in line in one. The average four-quarter earnings surprise was 4.87%.
Let's see how things have shaped up prior to the announcement.
Factors at Play
The Healthcare arm of STERIS witnessed 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. However, in the first quarter of fiscal 2023, the company’s strong capital equipment and service growth were offset by an organic decline in consumables, which is largely attributable to the timing of orders against robust comparisons in fiscal 2022. With the factors remaining unchanged through the months of the fiscal second quarter, this trend is expected to have continued in Q2.
STERIS’ Cantel business strengthens and expands its 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 second-quarter sales.
Meanwhile, STERIS’ hospital capital spending remains robust, as evident from the healthcare backlog. In the last reported quarter, the healthcare backlog totaled over $500 million and orders for the quarter were 40% large project related. The Healthcare backlog trend is likely to have continued for the legacy STERIS products at the end of the fiscal second quarter.
The Zacks Consensus Estimate for Healthcare revenues is pegged at $742 million, suggesting a 0.3% fall from the year-ago quarter’s reported figure.
The Applied Sterilization Technologies (AST) arm is anticipated to have gained from increased demand from core medical device customers.
The Zacks Consensus Estimate for AST revenues is pegged at $225 million, suggesting a rise of 9.8% 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 second 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 Dentalarm revenues grew in low single digits in the last reported quarter, impacted somewhat by supply chain challenges. Going by the industry-wide trend, these challenges are likely to have continued in fiscal second quarter too.
The Zacks Consensus Estimate for Dental revenues is pegged at $118 million.
Overall, for the second quarter of fiscal 2023, we expect the company’s business to have been hampered by extraordinary supply chain and labor inflation costs. In addition to the anticipated headwinds from supply chain and inflation, STERIS’ fiscal 2023 operating expenses are expected to have been higher with rising spending on travel, sales, and marketing, and other expenses. R&D spending is also anticipated to have been higher as we continue to develop and bring new products to our customers. All these are likely to have impacted the to-be-reported quarter’s earnings performance.
Q2 Estimates
The Zacks Consensus Estimate for the company’s second-quarter fiscal 2023 revenues is pegged at $1.22 billion, suggesting an improvement of 2.1% from the year-ago figure.
The Zacks Consensus Estimate for second-quarter fiscal 2023 EPS of $2.00 suggests a 0.5% 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 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 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.
Charles River has a long-term historical earnings growth rate of 17.7%. Charles River’s earnings yield of 5.47% compares favorably with the industry’s -2.84%.
McKesson (MCK - Free Report) has an Earnings ESP of +0.27% and a Zacks Rank of #2. McKesson is scheduled to release third-quarter 2022 results on Nov 1.
McKesson’s long-term historical earnings growth rate is estimated at 14.2%. MCK’s earnings yield of 6.94% compares favorably with the industry’s 5.22%.
Humana (HUM - Free Report) currently has an Earnings ESP of +0.76% and a Zacks Rank of #1. Humana is slated to release third-quarter 2022 results on Nov 2.
Humana’s long-term historical earnings growth rate is estimated at 16.2%. HUM’s earnings yield of 5.02% compares favorably with the industry’s 5.00%.
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STERIS (STE) to Report Q2 Earnings: What's in the Cards?
STERIS plc (STE - Free Report) is expected to report second-quarter fiscal 2023 results shortly.
In the last reported quarter, the company’s earnings per share of $1.90 were in line with the Zacks Consensus Estimate. Its earnings surpassed the consensus estimate in three of the trailing four quarters and came in line in one. The average four-quarter earnings surprise was 4.87%.
Let's see how things have shaped up prior to the announcement.
Factors at Play
The Healthcare arm of STERIS witnessed 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. However, in the first quarter of fiscal 2023, the company’s strong capital equipment and service growth were offset by an organic decline in consumables, which is largely attributable to the timing of orders against robust comparisons in fiscal 2022. With the factors remaining unchanged through the months of the fiscal second quarter, this trend is expected to have continued in Q2.
STERIS’ Cantel business strengthens and expands its 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 second-quarter sales.
STERIS plc Price and EPS Surprise
STERIS plc price-eps-surprise | STERIS plc Quote
Meanwhile, STERIS’ hospital capital spending remains robust, as evident from the healthcare backlog. In the last reported quarter, the healthcare backlog totaled over $500 million and orders for the quarter were 40% large project related. The Healthcare backlog trend is likely to have continued for the legacy STERIS products at the end of the fiscal second quarter.
The Zacks Consensus Estimate for Healthcare revenues is pegged at $742 million, suggesting a 0.3% fall from the year-ago quarter’s reported figure.
The Applied Sterilization Technologies (AST) arm is anticipated to have gained from increased demand from core medical device customers.
The Zacks Consensus Estimate for AST revenues is pegged at $225 million, suggesting a rise of 9.8% 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 second 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 Dentalarm revenues grew in low single digits in the last reported quarter, impacted somewhat by supply chain challenges. Going by the industry-wide trend, these challenges are likely to have continued in fiscal second quarter too.
The Zacks Consensus Estimate for Dental revenues is pegged at $118 million.
Overall, for the second quarter of fiscal 2023, we expect the company’s business to have been hampered by extraordinary supply chain and labor inflation costs. In addition to the anticipated headwinds from supply chain and inflation, STERIS’ fiscal 2023 operating expenses are expected to have been higher with rising spending on travel, sales, and marketing, and other expenses. R&D spending is also anticipated to have been higher as we continue to develop and bring new products to our customers. All these are likely to have impacted the to-be-reported quarter’s earnings performance.
Q2 Estimates
The Zacks Consensus Estimate for the company’s second-quarter fiscal 2023 revenues is pegged at $1.22 billion, suggesting an improvement of 2.1% from the year-ago figure.
The Zacks Consensus Estimate for second-quarter fiscal 2023 EPS of $2.00 suggests a 0.5% 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 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 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.
Charles River Laboratories International (CRL - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank of #3. The company will release third-quarter 2022 results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Charles River has a long-term historical earnings growth rate of 17.7%. Charles River’s earnings yield of 5.47% compares favorably with the industry’s -2.84%.
McKesson (MCK - Free Report) has an Earnings ESP of +0.27% and a Zacks Rank of #2. McKesson is scheduled to release third-quarter 2022 results on Nov 1.
McKesson’s long-term historical earnings growth rate is estimated at 14.2%. MCK’s earnings yield of 6.94% compares favorably with the industry’s 5.22%.
Humana (HUM - Free Report) currently has an Earnings ESP of +0.76% and a Zacks Rank of #1. Humana is slated to release third-quarter 2022 results on Nov 2.
Humana’s long-term historical earnings growth rate is estimated at 16.2%. HUM’s earnings yield of 5.02% compares favorably with the industry’s 5.00%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.