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Should You Continue to Hold STERIS Stock in Your Portfolio Now?
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Key Takeaways
STE's Healthcare unit saw 6% organic growth, fueled by U.S. procedures, pricing and market share gains.
STERIS' AST business saw robust growth, aided by EO sterilization and demand from biopharma makers.
STE cut long-term debt by 38.5%, ending fiscal Q4 with more cash than short-term debt on the books.
STERIS plc’s (STE - Free Report) Healthcare segment is gaining from the successful market adoption of its comprehensive offering, including infection prevention consumables and capital equipment. The Applied Sterilization Technologies (“AST”) division is experiencing solid growth supported by an increase in service revenues. Sound financial health also bodes well for the stock. Meanwhile, adverse macroeconomic impacts and increasing healthcare consolidation raise concerns for STERIS’ operations.
In the past year, shares of this Zacks Rank #3 (Hold) company have rallied 6.2% against the industry’s 12.2% fall. Meanwhile, the S&P 500 composite has risen 11.2% in the same time frame.
The renowned provider of infection prevention and other procedural products and services has a market capitalization of $22.88 billion. The company has an earnings yield of 4.4% compared to the industry’s -2.9%. In the trailing four quarters, STE delivered an average earnings surprise of 2.1%.
Let’s delve deeper.
Tailwinds for STE Stock
Promising Healthcare Business: Over the past few quarters, the segment’s organic growth has been driven by continuous procedure volume growth in the United States, and favorable pricing and market share gains. For the fourth quarter of fiscal 2025, Healthcare reported revenue growth of 5% year over year, reflecting a 6% improvement in consumable revenues and 13% growth in service revenues. Both segments posted strong organic growth. Healthcare achieved 6% constant currency organic revenue growth for the fiscal fourth quarter. Order growth was robust, with more than 12% growth in the fiscal fourth quarter. Margins improved, primarily driven by increasing volume, favorable pricing and positive productivity, offsetting labor inflation.
Image Source: Zacks Investment Research
Strong Prospects in the AST Segment: This technology-neutral contract sterilization service successfully offers a wide range of sterilization modalities through a worldwide network of more than 50 contract sterilization and laboratory facilities. STERIS, particularly, is gaining success with ethylene oxide (EO) sterilization. STERIS’ customers in this business are mostly the manufacturers of single-use, sterile technologies that are used in the aseptic manufacturing of vaccines and biopharmaceuticals. In the fiscal fourth quarter, the AST division experienced 9% growth year over year. This performance was driven by a 6% increase in service revenues. Constant currency organic revenues were in the high single digits. STERIS experienced its first signs of increased bioprocessing demand. Meanwhile, global demand from MedTech customers was stable.
Favorable Solvency: As of the fiscal fourth quarter of 2025, STERIS had a long-term debt of $1.92 billion, down 38.5% from $3.12 billion recorded at the end of the fiscal fourth quarter of 2024. The company exited the fiscal third quarter with cash and cash equivalents of $171.7 million, higher than its short-term debt of $125 million. The total debt-to-capital ratio was 22.5% at the end of the fiscal fourth quarter, down 33.2% year over year.
Downsides for STE Stock
Macroeconomic Problems: The current macroeconomic environment across the globe has adversely affected STERIS’ financial operations. Governments and insurance companies continue to look for ways to contain the rising cost of healthcare. This is significantly putting pressure on players in the healthcare industry, with STERIS being no exception. Increases in prices or decreases in the availability of raw materials, and oil and gas have also historically impaired STERIS’ procurement of necessary materials for product manufacture, leading to an increase in production costs. In addition, economic and market volatility have been affecting the investment portfolio of STERIS’ legacy-defined benefit pension plan. We are concerned that lingering macroeconomic softness might hamper STERIS’ growth.
Customer Consolidation: Several of STERIS’ customers are undergoing consolidation, partly due to healthcare cost reduction measures initiated by competitive pressures, as well as legislators, regulators and third-party payors. Moreover, some of STERIS’ customers have reduced their production costs and, subsequently, their product prices to attract more customers. This, in turn, has caused greater pricing pressure and, in some cases, resulted in customer loss for the company. If the company fails to check the rate of its customer consolidation now, it will adversely affect STERIS’ business performance and financial conditions going forward.
STE Stock Estimate Picture
In the past 30 days, the Zacks Consensus Estimate for STERIS’ fiscal 2026 earnings has increased 0.9% to $10.11.
The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $5.83 billion, which suggests 6.7% growth from the fiscal 2024 reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Phibro Animal Health (PAHC - Free Report) , Cardinal Health (CAH - Free Report) and Cencora (COR - Free Report) .
Phibro Animal Health has an estimated long-term earnings growth rate of 26% compared with the industry’s 13.9%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 30.6%. Its shares have rallied 79.8% compared with the industry’s 10.2% growth in the past year.
Cardinal Health, currently carrying a Zacks Rank #2 (Buy), has an estimated long-term earnings growth rate of 10.9% compared with the industry’s 9.9% growth. Shares of the company have surged 73.9% compared with the industry’s modest 0.9% gain. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.3%.
Cencora, carrying a Zacks Rank #2 at present, has an earnings yield of 5.3% compared with the industry’s 3.7%. Shares of the company have rallied 35.1% against the industry’s 16.7% decline. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6%.
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Should You Continue to Hold STERIS Stock in Your Portfolio Now?
Key Takeaways
STERIS plc’s (STE - Free Report) Healthcare segment is gaining from the successful market adoption of its comprehensive offering, including infection prevention consumables and capital equipment. The Applied Sterilization Technologies (“AST”) division is experiencing solid growth supported by an increase in service revenues. Sound financial health also bodes well for the stock. Meanwhile, adverse macroeconomic impacts and increasing healthcare consolidation raise concerns for STERIS’ operations.
In the past year, shares of this Zacks Rank #3 (Hold) company have rallied 6.2% against the industry’s 12.2% fall. Meanwhile, the S&P 500 composite has risen 11.2% in the same time frame.
The renowned provider of infection prevention and other procedural products and services has a market capitalization of $22.88 billion. The company has an earnings yield of 4.4% compared to the industry’s -2.9%. In the trailing four quarters, STE delivered an average earnings surprise of 2.1%.
Let’s delve deeper.
Tailwinds for STE Stock
Promising Healthcare Business: Over the past few quarters, the segment’s organic growth has been driven by continuous procedure volume growth in the United States, and favorable pricing and market share gains. For the fourth quarter of fiscal 2025, Healthcare reported revenue growth of 5% year over year, reflecting a 6% improvement in consumable revenues and 13% growth in service revenues. Both segments posted strong organic growth. Healthcare achieved 6% constant currency organic revenue growth for the fiscal fourth quarter. Order growth was robust, with more than 12% growth in the fiscal fourth quarter. Margins improved, primarily driven by increasing volume, favorable pricing and positive productivity, offsetting labor inflation.
Image Source: Zacks Investment Research
Strong Prospects in the AST Segment: This technology-neutral contract sterilization service successfully offers a wide range of sterilization modalities through a worldwide network of more than 50 contract sterilization and laboratory facilities. STERIS, particularly, is gaining success with ethylene oxide (EO) sterilization. STERIS’ customers in this business are mostly the manufacturers of single-use, sterile technologies that are used in the aseptic manufacturing of vaccines and biopharmaceuticals. In the fiscal fourth quarter, the AST division experienced 9% growth year over year. This performance was driven by a 6% increase in service revenues. Constant currency organic revenues were in the high single digits. STERIS experienced its first signs of increased bioprocessing demand. Meanwhile, global demand from MedTech customers was stable.
Favorable Solvency: As of the fiscal fourth quarter of 2025, STERIS had a long-term debt of $1.92 billion, down 38.5% from $3.12 billion recorded at the end of the fiscal fourth quarter of 2024. The company exited the fiscal third quarter with cash and cash equivalents of $171.7 million, higher than its short-term debt of $125 million. The total debt-to-capital ratio was 22.5% at the end of the fiscal fourth quarter, down 33.2% year over year.
Downsides for STE Stock
Macroeconomic Problems: The current macroeconomic environment across the globe has adversely affected STERIS’ financial operations. Governments and insurance companies continue to look for ways to contain the rising cost of healthcare. This is significantly putting pressure on players in the healthcare industry, with STERIS being no exception. Increases in prices or decreases in the availability of raw materials, and oil and gas have also historically impaired STERIS’ procurement of necessary materials for product manufacture, leading to an increase in production costs. In addition, economic and market volatility have been affecting the investment portfolio of STERIS’ legacy-defined benefit pension plan. We are concerned that lingering macroeconomic softness might hamper STERIS’ growth.
Customer Consolidation: Several of STERIS’ customers are undergoing consolidation, partly due to healthcare cost reduction measures initiated by competitive pressures, as well as legislators, regulators and third-party payors. Moreover, some of STERIS’ customers have reduced their production costs and, subsequently, their product prices to attract more customers. This, in turn, has caused greater pricing pressure and, in some cases, resulted in customer loss for the company. If the company fails to check the rate of its customer consolidation now, it will adversely affect STERIS’ business performance and financial conditions going forward.
STE Stock Estimate Picture
In the past 30 days, the Zacks Consensus Estimate for STERIS’ fiscal 2026 earnings has increased 0.9% to $10.11.
The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $5.83 billion, which suggests 6.7% growth from the fiscal 2024 reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Phibro Animal Health (PAHC - Free Report) , Cardinal Health (CAH - Free Report) and Cencora (COR - Free Report) .
Phibro Animal Health has an estimated long-term earnings growth rate of 26% compared with the industry’s 13.9%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 30.6%. Its shares have rallied 79.8% compared with the industry’s 10.2% growth in the past year.
PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardinal Health, currently carrying a Zacks Rank #2 (Buy), has an estimated long-term earnings growth rate of 10.9% compared with the industry’s 9.9% growth. Shares of the company have surged 73.9% compared with the industry’s modest 0.9% gain. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.3%.
Cencora, carrying a Zacks Rank #2 at present, has an earnings yield of 5.3% compared with the industry’s 3.7%. Shares of the company have rallied 35.1% against the industry’s 16.7% decline. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6%.