Yahoo Finance Why Is Steris (STE) Down 0.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Steris (STE). Shares have lost about 0.9% 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 the most recent earnings report in order to get a better handle on the important catalysts.
STERIS Q4 Earnings Beat Estimates, Gross Margin Down
STERISreported fourth-quarter fiscal 2023 adjusted earnings per share of $2.30, up 12.7% from the year-ago quarter’s figure. The metric also exceeded the Zacks Consensus Estimate by 6.9%.
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 EPS was $1.88, up 75.7% from the year-ago quarter’s earnings of $1.07.
Full-year adjusted EPS was $8.20, up 3.5% from fiscal 2022.
Revenues in Detail
Revenues of $1.38 billion increased 14% year over year in the fourth quarter. The metric beat the Zacks Consensus Estimate by 8.7%.
Organic revenues at constant exchange rate or CER rose 16% year over year in the fiscal fourth quarter.
In fiscal 2023, the company reported revenues of $4.96 billion, up 8.1% from fiscal 2022.
Quarter in Detail
The company operates through four segments — Healthcare, Applied Sterilization Technologies (AST), Life Sciences and Dental.
Revenues at Healthcare rose 20% year over year to $884.6 million (up 21% on a CER organic basis). This performance reflected a 31% improvement in capital equipment revenues, a 15% increase in service revenues and a 15% rise in consumable revenues.
Revenues at AST improved 7% to $239.1 million (up 10% on a CER organic basis). Revenue growth was driven by increased demand from core medical device customers, partially offset by continued reduction in demand from single-use bioprocessing customers.
Revenues in the Life Sciences segment rose 10% to $157.5 million (up 11% year over year on a CER organic basis). Service revenues rose 6% and capital equipment revenues increased 8%. Consumable revenues rose 14%.
The Dental segment reported revenues of $103.6 million, down 2% year over year (down 1% on a CER organic basis).
Margins
Gross profit in the reported quarter was $558.1 million, up 2.9% from the prior-year quarter’s gross profit. Gross margin contracted 475 basis points (bps) year over year to 42.5% in the reported quarter.
STERIS witnessed a 25.9% year-over-year drop in selling, general and administrative expenses to $335.9 million. Research and development expenses rose 1.1% to $26.4 million. Adjusted operating expenses of $362.3 million declined 24.5% year over year. The adjusted operating margin expanded 871 bps to 16.3%.
Financial Details
STERIS exited fiscal 2023 with cash and cash equivalents of $208.4 million compared with $259.4 million at the end of the fiscal third quarter.
Cumulative net cash flow from operating activities at the end of fiscal fourth quarter was $756.9 million compared with $684.8 million a year ago.
Guidance
STERIS provided its fiscal 2024 financial guidance. Full-year revenues are expected to increase 7-8% from fiscal 2022. Organic revenues at CER are expected to increase 6-7%. The Zacks Consensus Estimate for fiscal 2023 revenues is pegged at $5.14 billion.
Adjusted earnings per share for fiscal 2023 are expected in the range of $8.55 to $8.75. The Zacks Consensus Estimate for the metric is pegged at $8.71.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -7.13% due to these changes.
VGM Scores
At this time, Steris has an average Growth Score of C, a grade with the same score on the momentum front. 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 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 is part of the Zacks Medical - Instruments industry. Over the past month, DexCom (DXCM), a stock from the same industry, has gained 0.1%. The company reported its results for the quarter ended March 2023 more than a month ago.
DexCom reported revenues of $741.5 million in the last reported quarter, representing a year-over-year change of +17.9%. EPS of $0.17 for the same period compares with $0.08 a year ago.
For the current quarter, DexCom is expected to post earnings of $0.22 per share, indicating a change of +29.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.
DexCom has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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STERIS plc (STE) : Free Stock Analysis Report
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