10Y annualized return is
very good
at 12.9% per year
STE has met or exceeded earnings expectations in
some
recent quarters (6/10)
Strong Gross Profit Margin
Healthy Interest Coverage Ratio
Decent Net Profit Margin
Strong Operating Profit Margin
Strong Liquidity Ratios
Low Debt Levels
📈 Strong Revenue Growth
💪 Improved Margins
🛡️ Strong Market Position
🌱 Optimistic Growth Outlook
🔬 Bioprocessing Demand Growth
High Price-to-Earnings Ratio
Elevated Price-to-Sales Ratio
Moderate Return on Equity
Low Cash Ratio
⚖️ Litigation Expenses
⏳ Shipment Delays
🌊 Currency Impact
🔄 Uncertain Capital Equipment Recovery
Overall, STERIS demonstrates strong business quality with solid revenue growth and improved margins, although legal expenses and shipment delays present challenges. Future prospects appear positive with optimistic growth outlooks and strong demand in certain segments, but potential currency impacts and uncertainties in capital equipment recovery warrant caution.
Analysis Date: February 6, 2025
Last Updated: March 12, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
STERIS plc is a company that helps keep hospitals and healthcare facilities safe from infections. They provide cleaning products, tools, and equipment that help doctors and nurses perform their jobs effectively. STERIS also offers services to ensure that medical instruments are properly cleaned and sterilized. In addition to healthcare, they provide products for dental offices and support for companies that make medical devices and medicines.
Streams of revenue
Geographic Distribution
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$182.78
Current Market Price: $212.09
IV/P Ratio: 0.86x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-16.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for STE
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (44.78)
P/B ratio ≤ 1.5 (3.26)
Current ratio ≥ 2.0 (2.13x)
Long-term debt < Net current assets (2.15x)
Margin of safety (-16.0%)
STE does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
7.29%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
44.69%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
8.66%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
With a net profit margin of 8.66%, the company demonstrates a reasonable ability to convert revenue into actual profit.
An operating profit margin of 17.66% indicates efficient operational management, allowing for solid profit generation from core business activities.
A return on equity of 7.29% suggests that the company is generating moderate returns for shareholders, indicating potential inefficiencies in capital utilization.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.36x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q3 2025
Current Ratio
Current assets divided by current liabilities
2.13x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q3 2025
The current ratio of 2.13 and quick ratio of 1.40 illustrate a solid liquidity position, enabling the company to meet short-term obligations comfortably.
With a debt-to-equity ratio of 0.36 and debt-to-assets ratio of 0.23, the company maintains a conservative leverage profile, reducing financial risk.
The cash ratio of 0.17 indicates a limited ability to cover current liabilities with cash alone, which may raise concerns for immediate liquidity.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
STERIS reported a 6% growth in total revenue driven by strong recurring revenue streams and price increases. The healthcare segment saw a constant currency organic revenue growth of 7%, indicating robust demand.
The gross margin increased by 90 basis points to 44.6%, with EBIT margin remaining strong at 23.3%. Positive pricing and productivity improvements offset labor inflation, showcasing efficient cost management.
STERIS holds a competitive advantage in the healthcare and life sciences sectors, with a solid backlog of $435 million in healthcare orders, indicating stable demand despite some shipment delays.
Legal expenses related to ethylene oxide trials have increased significantly, impacting operating income. This uncertainty may pose risks to future profitability.
Healthcare capital equipment revenue declined by 5% due to shipment delays caused by customer readiness, indicating potential issues in supply chain management.
The company is tightening its revenue guidance to approximately 6% for the year, reflecting confidence in continued demand. Free cash flow is projected at $700 million, indicating strong cash generation capabilities.
The AST segment reported a 10% growth in services, driven by bioprocessing demand exceeding expectations. This trend indicates potential for sustained growth in the life sciences sector.
The company has acknowledged an unfavorable impact from currency rate changes, which could affect revenue and profit, highlighting external risks to growth.
Healthcare capital equipment revenue is experiencing delays and a decline, raising questions about the timing of recovery and future growth in this segment.
