Back to top

Image: Bigstock

STERIS (STE) Q4 Earnings Surpass Estimates, Margins Rise

Read MoreHide Full Article

STERIS plc (STE - Free Report) reported fourth-quarter fiscal 2019 adjusted earnings per share (EPS) of $1.53, up 23.4% year over year. The metric surpassed the Zacks Consensus Estimate by 6.3%. Reported EPS came in at $1.27 cents, up from the year-ago 86 cents.

For fiscal 2019, adjusted EPS came in at $4.89, up 17.8% from the year-ago period. The figure has surpassed the Zacks Consensus Estimate by 2.1%.

Revenues of $768.2 million in the quarter rose 7.3% year over year and topped the Zacks Consensus Estimate by 4.6%.

For the full year, revenues came in at $2.78 billion, up 6.5% from a year ago. The figure has surpassed the Zacks Consensus Estimate by 1.1%.

Quarter in Detail

Organic revenue growth at constant currency was 9% year over year in the fiscal fourth quarter, mainly driven by growth across all segments.

STERIS plc Price, Consensus and EPS Surprise

STERIS plc Price, Consensus and EPS Surprise

STERIS plc price-consensus-eps-surprise-chart | STERIS plc Quote

 

The company operates through four segments: Healthcare Products, Healthcare Specialty Services, Applied Sterilization Technologies and Life Sciences.

Revenues at Healthcare Products increased 7.4% year over year to $386.6 million (up 8.5% on a constant currency organic basis). In the quarter under review, service revenues grew 7% and capital equipment revenues rose 10%. Meanwhile, consumable revenues grew 4% on divestitures limiting growth.

Revenues at the Healthcare Specialty Services segment were up 10.9% to $135.5 million (up 12.7% on a constant currency organic basis).

Revenues at Applied Sterilization Technologies rose 7.1% to $143.1 million (up 10.4% at CER organic basis) backed by increased demand from core medical device customers.

Revenues at Life Sciences segment rose 2.7% to $103 million (up 4.4% at CER organic basis) on 14% growth in consumable revenues along with a 2% rise in service revenues. However, capital equipment revenues declined 9% year over year.

Margins

Adjusted gross margin (after excluding cost of revenues for restructuring) expanded 274 basis points (bps) year over year to 43.6% in the reported quarter.

STERIS witnessed a 6.8% year-over-year rise in selling, general and administrative expenses to $173.1 million. Research and development expenses declined 9.8% to $15.9 million. Overall, adjusted operating margin expanded 323 bps on a year-over-year basis to 18.9% in the reported quarter.

Financial Details

STERIS exited fiscal 2019 with cash and cash equivalents of $220.6 million compared with $224.9 million at the end of third-quarter fiscal 2019. The company had long-term debt of $1.18 billion at the end of fiscal 2019 compared with $1.25 billion at the end of third-quarter fiscal 2019.

2020 Guidance Issued

STERIS has issued its projections for fiscal 2020 constant currency organic revenue growth at around 5-6 %. The Zacks Consensus Estimate for fiscal 2020 revenues is pegged at $2.90 billion.

The company expects adjusted EPS for fiscal 2020 in the range of $5.28-5.43. The Zacks Consensus Estimate for fiscal 2020 adjusted EPS lies at $5.31, within the guided range.

Our Take

STERIS exited fiscal 2019 on a strong note. We are encouraged to note that the company witnessed solid revenue growth across each of its operating segments. The company’s constant currency organic revenue growth expectations for fiscal 2020 is indicative of brighter prospects. Contributions from elevated consumer demand, broader portfolio of products and services, as well as some Brexit-related inventory build-up buoy optimism for the company.

Zacks Rank & Other Key Picks

STERIS currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks with solid results this earnings season are Masimo Corporation (MASI - Free Report) , DENTSPLY SIRONA (XRAY - Free Report) and CONMED Corporation (CNMD - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Masimo Corporation reported first-quarter 2019 adjusted earnings per share (EPS) of 79 cents, which surpassed the Zacks Consensus Estimate of 75 cents. The company’s revenues improved 8.8% year over year to $231.7 million and edged past the Zacks Consensus Estimate of $223.6 million.

DENTSPLY reported adjusted EPS of 49 cents in the first quarter of 2019, beating the Zacks Consensus Estimate of 38 cents. Revenues of $946.2 million surpassed the Zacks Consensus Estimate of $917.1 million.

CONMED posted first-quarter 2019 adjusted EPS of 57 cents, which exceeded the Zacks Consensus Estimate of 54 cents. Also, revenues of $218.4 million outshined the consensus mark of $213 million.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%. This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.

See their latest picks free >>




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Masimo Corporation (MASI) - free report >>

CONMED Corporation (CNMD) - free report >>

DENTSPLY SIRONA Inc. (XRAY) - free report >>

STERIS plc (STE) - free report >>

More from Zacks Analyst Blog

You May Like