Back to top

Image: Bigstock

Will Healthcare Growth Help STE Beat on Q1 Earnings?

Read MoreHide Full Article

Key Takeaways

  • STE's Q1 EPS estimate of $2.32 suggests 14.3% growth from the year-ago quarter.
  • STE's Healthcare and AST segments are expected to post revenue gains of 5.1% and 6.3%, respectively.
  • STE's Life Sciences sales may rise 5.5% as mix, pricing, and divestiture aid margins despite capital softness.

STERIS plc (STE - Free Report) is scheduled to release first-quarter fiscal 2026 results on Aug. 7, after market close.

In the last reported quarter, the company posted adjusted earnings per share (EPS) of $2.74, which surpassed the Zacks Consensus Estimate by 5.79%. STE beat on earnings in three of the trailing four quarters and met once, delivering an average surprise of 2.05%.

Q1 Estimates for STE

The Zacks Consensus Estimate for revenues is pegged at $1.36 billion, suggesting an increase of 6.2% from the year-ago reported figure.

The Zacks Consensus Estimate for EPS is pegged at $2.32, indicating a year-over-year increase of 14.3%.

Estimate Revision Trend Ahead of STE's Q1 Earnings

Estimates for earnings have remained constant at $2.32 per share in the past 30 days.

Let's take a look at how things might have shaped up for the MedTech major prior to the announcement.

Healthcare

In the previous quarter, growth across consumables and services was robust, favored by procedure volumes in the United States as well as price and market share gains. We expect this trend to have continued in the fiscal first quarter as well.

The company, however, maintains confidence in recurring revenue streams and backlog strength. This should get reflected in the first-quarter results. In the to-be-reported quarter, within Healthcare capital equipment, order growth is expected to have remained robust despite ongoing shipment issues due to customer project delays.

Our model projects the segment’s revenues to improve 5.1% from the year-ago reported figure.

Applied Sterilization Technologies (“AST”)

In the fiscal first quarter, Steris is expected to have experienced organic revenue growth within this segment. Also, in the previous quarter, capital equipment shipments more than doubled compared to the prior year, which exceeded the company’s expectations. We expect this trend to have continued in the fiscal first quarter. In line with this, global MedTech customers are once again expected to have remained stable and the company is likely to have experienced an increase in bioprocessing demand. We expect these to have contributed to STE’s top-line performance in the to-be-reported quarter.

Per our model, AST segment’s revenues for the quarter are likely to increase 6.3% year over year.

STERIS plc Price and EPS Surprise

 

Life Sciences

The segment's fiscal fourth-quarter 2025 revenues declined year over year as strong growth in consumables and services was offset by a decline in capital equipment revenue. This trend might have continued in the to-be-reported quarter. However, the segment’s margin is expected to have benefited from a favorable mix, pricing, and the divestiture of the CECS business in the to-be-reported quarter.

Our model projects the segment’s revenues to increase 5.5% year over year.

What Our Model Suggests for STE

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 a higher chance of beating on earnings, which is not the case here.

Earnings ESP: STERIS has an Earnings ESP of -3.24%. 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 some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this reporting cycle.

Exact Sciences (EXAS - Free Report) has an Earnings ESP of +475.00% and a Zacks Rank #2 at present. The company is slated to release second-quarter 2025 results on Aug. 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

EXAS’ earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 48.8%. As per the Zacks Consensus Estimate, the company’s second-quarter EPS may increase 77.8% from the year-ago quarter’s figure.

Cencora (COR - Free Report) has an Earnings ESP of +1.49% and a Zacks Rank #2 at present. The company is slated to release third-quarter fiscal 2025 results on Aug. 6.

The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.00%. The Zacks Consensus Estimate for fiscal third-quarter EPS implies a year-over-year increase of 13.2%.

Cardinal Health (CAH - Free Report) has an Earnings ESP of +0.68% and a Zacks Rank #2 at present. The company is expected to release fiscal fourth-quarter 2025 results on Aug. 12.

CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.30%. The Zacks Consensus Estimate for fiscal fourth-quarter EPS suggests a year-over-year improvement of 1.3%.

Published in