STERIS (STE) to Report Q1 Earnings: What's in the Cards?

·4 min read

STERIS plc STE is slated to report first-quarter fiscal 2021 results on Aug 4, before market open.

In the last-reported quarter, the company’s earnings per share (EPS) of $1.64 surpassed the Zacks Consensus Estimate by 4.46%. Moreover, its earnings surpassed the consensus estimate in each of the last four quarters. The trailing four-quarter average earnings surprise was 5.36%.

Let's see how things have shaped up prior to the announcement.

Factors at Play

We are optimistic about the company’s new strategic investments across all businesses and small tuck-in acquisitions mostly within health care products arm. These are expected to have aided the company’s second-quarter performance. However, excluding the acquisition-related benefits, healthcare products might have experienced loss of revenues due to the COVID-19 pandemic, particularly endoscopy products, given a  pull-back of non-COVID procedures.

Within Applied Sterilization Technologies (AST), we expect increased demand from the company’s core medical device customers to have pumped up sales. With the pandemic-led change in market behaviour, we expect continued growth in AST facilities that process PPE like gowns and gloves and medical devices for the home setting like insulin pumps and blood glucose monitors.

STERIS plc Price and EPS Surprise

STERIS plc Price and EPS Surprise
STERIS plc Price and EPS Surprise

STERIS plc price-eps-surprise | STERIS plc Quote

Within Life Sciences, a few pharma customers opted for stockpiling of products in the last-reported quarter. This tendency continued through April and accordingly we expect this to have influenced segment sales this time around.

However, the company’s time-deferrable procedure-related devices like orthopedic implants are expected to have borne the brunt of the COVID-19 catastrophe. Fiscal first quarter sales are expected to reflect a significant decline in procedure volume. The company’s outsource reprocessing business might have been impacted by a decline in procedures. The instrument repair business is expected to have been dull too.

In April, it saw stronger declines in Healthcare Products with neutral performance in Life Science and AST.

Q1 Estimates

The Zacks Consensus Estimate for first-quarter fiscal 2021 revenues is pegged at $639.9 million, suggesting 8.2% fall from the year-ago reported figure.

The Zacks Consensus Estimate for the company’s EPS of 97 cents suggests 21.1% decline from the year-ago reported figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. However, this is not the case here as you can see:

Earnings ESP: STERIS has an Earnings ESP of -1.03%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #5 (Strong Sell).

Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle. You can see the complete list of today’s Zacks #1 Rank stocks here.

Integra LifeSciences Holdings Corporation IART has an Earnings ESP of +20.69% and a Zacks Rank #2.

Exact Sciences Corporation EXAS has an Earnings ESP of +6.69% and a Zacks Rank #2.

IDEXX Laboratories, Inc. IDXX has an Earnings ESP of +18.14% and a Zacks Rank #2.

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