A month has gone by since the last earnings report for Steris (STE Quick QuoteSTE - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Steris due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. <p style="text-align: justify;"><strong>STERIS Posts Strong Q1 on Balanced Segmental Growth</strong></p><p style="text-align: justify;">STERIS reported first-quarter fiscal 2019 adjusted earnings per share (EPS) of $1, up 17.6% year over year and ahead of the Zacks Consensus Estimate of 98 cents. Reported EPS came in at 82 cents, up from the year-ago figure of 68 cents.</p><p style="text-align: justify;">STERIS generated revenues of $638.8 million in the fiscal first quarter, up 5.1% year over year. Moreover, the top line exceeded the Zacks Consensus Estimate by 0.01%.</p><p style="text-align: justify;"><strong>Quarter in Detail</strong></p><p style="text-align: justify;">Organic revenue growth at constant currency was 5% year over year in the fiscal first quarter, mainly driven by growth across all segments.</p><p style="text-align: justify;">The company operates through four segments: Healthcare Products, Healthcare Specialty Services, Applied Sterilization Technologies and Life Sciences.</p><p style="text-align: justify;">Revenues at Healthcare Products&nbsp;increased 1% year over year to $292 million (up 4% on a constant currency organic basis). In the quarter under review, service revenues grew 5% and capital equipment revenues rose 2%. However, consumable revenues declined 3% due to divestitures.</p><p style="text-align: justify;">Revenues at the&nbsp;Healthcare Specialty Services&nbsp;segment were up 8% to $122.2 million (up 6% on a constant currency organic basis).</p><p style="text-align: justify;">Revenues at&nbsp;Applied Sterilization Technologies&nbsp;rose 12% to $139.5 million (up 9%) backed by increased demand from core medical device customers.</p><p style="text-align: justify;">Revenues at Life Sciences&nbsp;segment grew 5% to $85 million (up 3%) on 5% growth in service, capital equipment and consumable revenues.&nbsp;</p><p style="text-align: justify;"><strong>Margins</strong></p><p style="text-align: justify;">Adjusted gross margin improved 10 basis points (bps) year over year to 42.3% in the reported quarter. Per STERIS, gross margin expansion was supported by a favorable product mix and price along with gains from divestitures. However, currency movements and spending in outsourced reprocessing had an unfavorable impact on the gross margin.</p><p style="text-align: justify;">STERIS witnessed a 1.3% year-over-year rise in selling, general and administrative expenses to $158.4 million. Research and development expenses rose 15.7% to $16.2 million. Accordingly, adjusted operating margin expanded 70 bps on a year-over-year basis to 14.8% in the reported quarter.</p><p style="text-align: justify;"><strong>Financial Details</strong></p><p style="text-align: justify;">STERIS exited first-quarter fiscal 2019 with cash and cash equivalents of $218.5 million compared with $201.5 million at the end of fiscal 2018. The company had long-term debt of $1.320 billion at the end of the first quarter compared with $1.316 billion at the end of fiscal 2018.</p><p style="text-align: justify;">For the first three months of fiscal 2019, the company generated $100.8 million in cash flow from operations, up from $80.7 million in the year-ago period. Further, free cash flow in the same period was $75.8 million compared with $44.2 million a year ago.</p><p style="text-align: justify;"><strong>2019 Guidance Reiterated</strong></p><p style="text-align: justify;">STERIS continues to expect 4-5% of constant currency organic revenue growth in fiscal 2019 from the prior fiscal. The Zacks Consensus Estimate for fiscal 2019 revenues is pegged at $2.74 billion.</p><p style="text-align: justify;">Adjusted EPS for fiscal 2019 is projected in the range of $4.63-$4.75. The consensus estimate for fiscal 2019 adjusted EPS lies within the guided range at $4.71.</p>

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Steris has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Steris has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.