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STE Stock Up on Q2 Earnings & Revenue Beat, '27 EPS View Up
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Key Takeaways
STE's Q2 adjusted EPS jumped 19% to $2.94, while revenues grew 8.8% to $1.59 billion, beating estimates.
Life Sciences revenues surged 17.7%, while Healthcare grew 8.6%, supported by higher volumes and pricing.
STE raises fiscal 2027 adjusted EPS guidance to $11.35-$11.55, including an 18-cent tariff refund benefit.
STERIS plc (STE - Free Report) reported second-quarter fiscal 2027 adjusted earnings per share (EPS) of $2.94, up 19% year over year. The bottom line surpassed the Zacks Consensus Estimate by 10.1%, driven by improved pricing, higher volumes and favorable business mix.
On a GAAP basis, EPS increased to $2.19 from $1.94 in the year-ago quarter.
Revenues increased 8.8% to $1.59 billion, beating the consensus mark by 1.5%. Constant-currency organic revenues grew 8.1%, supported by broad-based segment growth. Total backlog increased 1.4% year over year to $548.9 million.
Following the earnings announcement, STE stock rose 0.8% in after-market trading yesterday.
STERIS Posts Strong Healthcare Growth
Healthcare revenues increased 8.6% year over year to $1.12 billion. Service revenues rose 10.1% to $440.6 million, while consumables revenues advanced 10% to $411.8 million. Capital equipment revenues increased 4.1% to $270 million. Constant-currency organic revenue growth was 7.4%.
Healthcare operating income increased 3.7% to $269.2 million from $259.5 million in the prior-year quarter. The improvement reflected higher volumes and better pricing, partially offset by inflation, lower productivity and investments. The segment's backlog increased 6.5% to $455.5 million.
STE's AST Segment Benefits From Improved Pricing
Applied Sterilization Technologies (“AST”) revenues increased 5% to $295.6 million from $281.5 million a year ago. Service revenues advanced 5.2% to $293.9 million, while capital equipment revenues declined 21% to $1.7 million. Constant-currency organic revenues grew 5.3%.
AST operating income increased 3.5% to $132.1 million from $127.6 million in the year-ago quarter. Improved pricing supported profitability, although inflation and higher depreciation expenses partially offset the gains.
STERIS Sees Robust Life Sciences Performance
Life Sciences revenues climbed 17.7% year over year to $170.6 million. Capital equipment revenues surged 53.3% to $48.9 million, while consumables revenues increased 8.8% to $84 million. Service revenues improved 5.3% to $37.7 million. Constant-currency organic revenues advanced 18.1%.
Segment operating income increased 26.5% to $75.8 million from $59.9 million in the prior-year quarter. The improvement was driven by stronger pricing, productivity gains, higher sales volumes and a favorable business mix. Life Sciences backlog, however, declined 17.9% to $93.4 million.
STE Expands Profitability Despite Higher Expenses
Gross profit increased 10% to $710.8 million from $645.9 million in the prior-year quarter. Gross margin expanded approximately 51 basis points (bps) to 44.7%. Adjusted gross profit increased 11.3% to $719.6 million.
Selling, general and administrative expenses rose 4.7% to $366 million, while research and development expenses increased 11.7% to $31.5 million. Total operating expenses advanced 9.6% to $416.6 million. Adjusted operating income increased 15.8% to $390.5 million, while the adjusted operating margin expanded approximately 150 basis points to 24.6%.
Cash and cash equivalents totaled $531.1 million as of Sept. 30, 2026, compared with $439.6 million as of March 31, 2026. Long-term indebtedness declined to $1.65 billion from $1.81 billion over the same period.
Cash flow from operating activities totaled $656.1 million during the first six months of fiscal 2027, down from $707.8 million a year ago. Free cash flow decreased to $492.5 million from $527.7 million, primarily reflecting a lower working capital contribution, partially offset by higher net income.
During the six-month period, STERIS repurchased $215.9 million of ordinary shares and paid $128.4 million in dividends.
STE Raises Fiscal 2027 Earnings Outlook
STERIS raised its fiscal 2027 adjusted EPS guidance to $11.35-$11.55 from the previous projection of $11.10-$11.30. The Zacks Consensus Estimate for the metric is pegged at $11.17.
The company has maintained its reported revenue growth outlook of 7-8% and constant-currency organic revenue growth expectations of 6-7%. The Zacks Consensus Estimate is pegged at $6.39 billion, implying 7.7% growth from fiscal 2025.
Our Take
STERIS ended second-quarter fiscal 2027 with better-than-expected results, with earnings and revenues beating their respective estimates. Also, the expansion of both the margins looks encouraging.
Life Sciences delivered particularly strong performance. The company’s updated earnings outlook reflects stable underlying performance along with the benefit of tariff refunds received year to date.
Some other top-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Medpace (MEDP - Free Report) and GE HealthCare Technologies (GEHC - Free Report) .
Intuitive Surgical, carrying a Zacks Rank #2 at present, posted third-quarter 2026 adjusted EPS of $3.00, exceeding the Zacks Consensus Estimate by 14.94%. Revenues of $3.05 billion topped the Zacks Consensus Estimate by 5.84%.
ISRG has an earnings yield of 2.5% against the industry’s negative 2.1% yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 15.12%.
Medpace, currently carrying a Zacks Rank #2, reported third-quarter 2026 adjusted EPS of $4.84, which surpassed the Zacks Consensus Estimate by 8.76%. Revenues of $716 million beat the Zacks Consensus Estimate by 1.02%.
MEDP has an estimated long-term earnings growth rate of 14.3% compared with the industry’s 13.2%. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 9.77%.
GE HealthCare, currently carrying a Zacks Rank #2, reported third-quarter 2026 adjusted EPS of $1.34, which topped the Zacks Consensus Estimate by 10.74%. Revenues of $5.51 billion beat the Zacks Consensus Estimate by 2.87%.
GEHC has an earnings yield of 6.5% compared with the industry’s 2.8%. The company beat earnings estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 3.15%.
View the Zacks #1 Rank List
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STE Stock Up on Q2 Earnings & Revenue Beat, '27 EPS View Up
Key Takeaways
STERIS plc (STE - Free Report) reported second-quarter fiscal 2027 adjusted earnings per share (EPS) of $2.94, up 19% year over year. The bottom line surpassed the Zacks Consensus Estimate by 10.1%, driven by improved pricing, higher volumes and favorable business mix.
On a GAAP basis, EPS increased to $2.19 from $1.94 in the year-ago quarter.
Revenues increased 8.8% to $1.59 billion, beating the consensus mark by 1.5%. Constant-currency organic revenues grew 8.1%, supported by broad-based segment growth. Total backlog increased 1.4% year over year to $548.9 million.
Following the earnings announcement, STE stock rose 0.8% in after-market trading yesterday.
STERIS Posts Strong Healthcare Growth
Healthcare revenues increased 8.6% year over year to $1.12 billion. Service revenues rose 10.1% to $440.6 million, while consumables revenues advanced 10% to $411.8 million. Capital equipment revenues increased 4.1% to $270 million. Constant-currency organic revenue growth was 7.4%.
Healthcare operating income increased 3.7% to $269.2 million from $259.5 million in the prior-year quarter. The improvement reflected higher volumes and better pricing, partially offset by inflation, lower productivity and investments. The segment's backlog increased 6.5% to $455.5 million.
STE's AST Segment Benefits From Improved Pricing
Applied Sterilization Technologies (“AST”) revenues increased 5% to $295.6 million from $281.5 million a year ago. Service revenues advanced 5.2% to $293.9 million, while capital equipment revenues declined 21% to $1.7 million. Constant-currency organic revenues grew 5.3%.
AST operating income increased 3.5% to $132.1 million from $127.6 million in the year-ago quarter. Improved pricing supported profitability, although inflation and higher depreciation expenses partially offset the gains.
STERIS Sees Robust Life Sciences Performance
Life Sciences revenues climbed 17.7% year over year to $170.6 million. Capital equipment revenues surged 53.3% to $48.9 million, while consumables revenues increased 8.8% to $84 million. Service revenues improved 5.3% to $37.7 million. Constant-currency organic revenues advanced 18.1%.
Segment operating income increased 26.5% to $75.8 million from $59.9 million in the prior-year quarter. The improvement was driven by stronger pricing, productivity gains, higher sales volumes and a favorable business mix. Life Sciences backlog, however, declined 17.9% to $93.4 million.
STE Expands Profitability Despite Higher Expenses
Gross profit increased 10% to $710.8 million from $645.9 million in the prior-year quarter. Gross margin expanded approximately 51 basis points (bps) to 44.7%. Adjusted gross profit increased 11.3% to $719.6 million.
Selling, general and administrative expenses rose 4.7% to $366 million, while research and development expenses increased 11.7% to $31.5 million. Total operating expenses advanced 9.6% to $416.6 million. Adjusted operating income increased 15.8% to $390.5 million, while the adjusted operating margin expanded approximately 150 basis points to 24.6%.
STERIS plc Price, Consensus and EPS Surprise
STERIS plc price-consensus-eps-surprise-chart | STERIS plc Quote
STERIS Maintains Financial Flexibility
Cash and cash equivalents totaled $531.1 million as of Sept. 30, 2026, compared with $439.6 million as of March 31, 2026. Long-term indebtedness declined to $1.65 billion from $1.81 billion over the same period.
Cash flow from operating activities totaled $656.1 million during the first six months of fiscal 2027, down from $707.8 million a year ago. Free cash flow decreased to $492.5 million from $527.7 million, primarily reflecting a lower working capital contribution, partially offset by higher net income.
During the six-month period, STERIS repurchased $215.9 million of ordinary shares and paid $128.4 million in dividends.
STE Raises Fiscal 2027 Earnings Outlook
STERIS raised its fiscal 2027 adjusted EPS guidance to $11.35-$11.55 from the previous projection of $11.10-$11.30. The Zacks Consensus Estimate for the metric is pegged at $11.17.
The company has maintained its reported revenue growth outlook of 7-8% and constant-currency organic revenue growth expectations of 6-7%. The Zacks Consensus Estimate is pegged at $6.39 billion, implying 7.7% growth from fiscal 2025.
Our Take
STERIS ended second-quarter fiscal 2027 with better-than-expected results, with earnings and revenues beating their respective estimates. Also, the expansion of both the margins looks encouraging.
Life Sciences delivered particularly strong performance. The company’s updated earnings outlook reflects stable underlying performance along with the benefit of tariff refunds received year to date.
STE’s Zacks Rank & Other Key Picks
STE currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Medpace (MEDP - Free Report) and GE HealthCare Technologies (GEHC - Free Report) .
Intuitive Surgical, carrying a Zacks Rank #2 at present, posted third-quarter 2026 adjusted EPS of $3.00, exceeding the Zacks Consensus Estimate by 14.94%. Revenues of $3.05 billion topped the Zacks Consensus Estimate by 5.84%.
ISRG has an earnings yield of 2.5% against the industry’s negative 2.1% yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 15.12%.
Medpace, currently carrying a Zacks Rank #2, reported third-quarter 2026 adjusted EPS of $4.84, which surpassed the Zacks Consensus Estimate by 8.76%. Revenues of $716 million beat the Zacks Consensus Estimate by 1.02%.
MEDP has an estimated long-term earnings growth rate of 14.3% compared with the industry’s 13.2%. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 9.77%.
GE HealthCare, currently carrying a Zacks Rank #2, reported third-quarter 2026 adjusted EPS of $1.34, which topped the Zacks Consensus Estimate by 10.74%. Revenues of $5.51 billion beat the Zacks Consensus Estimate by 2.87%.
GEHC has an earnings yield of 6.5% compared with the industry’s 2.8%. The company beat earnings estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 3.15%.