Yahoo Finance Why Is Steris (STE) Up 5.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Steris (STE). Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Steris due for a pullback? 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.
STERIS Q3 Earnings Top Estimates, Fiscal '24 Sales View Up
STERIS reported third-quarter fiscal 2024 adjusted earnings per share of $2.22, up 9.9% from the year-ago quarter’s figure. The metric surpassed the Zacks Consensus Estimate by 2.8%.
The adjustment excludes the impacts of certain non-recurring charges like the amortization of acquired intangible assets and acquisition and integration-related charges, among others.
The company’s GAAP earnings per share was $1.42, an increase of 14.5% from the year-ago period.
Revenues in Detail
Revenues of $1.40 billion increased 14.8% year over year in the third quarter. The metric beat the Zacks Consensus Estimate by 4.2%.
Organic revenues at the constant exchange rate or CER rose 10% year over year in the fiscal third quarter.
Quarter in Detail
The company operates through four segments — Healthcare, Applied Sterilization Technologies (“AST”), Life Sciences and Dental.
Revenues at Healthcare rose 19.1% year over year to $916.2 million (up 12% on a CER organic basis). This performance reflected a 17% improvement in capital equipment revenues, a 13% increase in service revenues and a 27% rise in consumable revenues.
Revenues at AST improved 5.8% to $234.9 million (up 4% on a CER organic basis). However, underlying service growth continues to be impacted by Medtech Customer inventory management and the continued reduction in demand from bioprocessing customers.
Revenues in the Life Sciences segment increased 20.9% to $146.6 million (up 20% year over year on a CER organic basis). This performance reflected a 57% increase in capital equipment revenues and an 8% increase in consumable revenues, while service revenues were up by 12% compared to last year’s same period.
The Dental segment reported revenues of $97.9 million, down 5.4% year over year (down 6% on a CER organic basis).
Margins
The gross profit in the reported quarter was $602.6 million, up 15.6% from the prior-year quarter. The gross margin expanded 29 basis points (bps) year over year to 43.2% despite a 14.2% rise in the cost of revenues.
STERIS witnessed an 18.2% year-over-year rise in selling, general and administrative expenses to $360.5 million. Research and development expenses rose 1.6% to $25.9 million. Adjusted operating expenses of $386.4 million increased 16.9% year over year. The adjusted operating margin contracted 21 bps to 15.5%.
Financial Details
STERIS exited the third quarter of fiscal 2024 with cash and cash equivalents of $195.6 million compared with $213.8 million at the end of the fiscal second quarter of 2024.
Cumulative net cash flow from operating activities at the end of the fiscal third quarter was $718.5 million, sequentially up from $427.2 million in the fiscal second quarter. Further, the company has a five-year annualized dividend growth rate of 8.76%.
Guidance
STERIS provided an updated fiscal 2024 guidance.
The company expects fiscal 2024 revenues to increase 10 (previously 9-10%). Organic revenue expectation at CER stands at 7 (earlier 6).
The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $5.44 billion, implying 9.6% growth from fiscal 2023.
Adjusted EPS for fiscal 2024 is now expected in the range of $8.60-$8.70 (previously $8.60-$8.80). The Zacks Consensus Estimate for the metric is pegged at $8.66.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Steris has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Steris has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Steris belongs to the Zacks Medical - Instruments industry. Another stock from the same industry, Thermo Fisher Scientific (TMO), has gained 8.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Thermo Fisher reported revenues of $10.89 billion in the last reported quarter, representing a year-over-year change of -4.9%. EPS of $5.67 for the same period compares with $5.40 a year ago.
Thermo Fisher is expected to post earnings of $4.71 per share for the current quarter, representing a year-over-year change of -6.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Thermo Fisher. Also, the stock has a VGM Score of C.
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STERIS plc (STE) : Free Stock Analysis Report
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