STERIS (STE) Set to Post Q3 Earnings: What's in the Cards?
STERIS plc STE is set to release third-quarter fiscal 2024 results on Feb 8 before the opening bell.
The company posted adjusted earnings per share (EPS) of $2.03 in the last reported quarter, which missed the Zacks Consensus Estimate by 0.98%. STERIS beat earnings estimates in two of the trailing four quarters and missed twice, the average surprise being 1.13%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Healthcare
As witnessed in recent months, the Healthcare arm of STERIS is likely to have continued its strong momentum in the fiscal third quarter. Growth across capital equipment, consumables and services is expected to have been robust, primarily driven by the procedure volume rebound in the United States, as well as price and market share gains. This may have helped the company offset the macro challenges impacting demand in the other segments.
We assume the Healthcare backlog to have further reduced, as the company may have been able to ship at a faster pace than the new orders that are coming in. STERIS’ focus on getting back to normal lead times may have helped it meet the customer demand.
Our model projects the segment’s revenues for the fiscal third quarter to improve 8.8% compared to last year’s comparable period.
STERIS plc Price and EPS Surprise
STERIS plc price-eps-surprise | STERIS plc Quote
Applied Sterilization Technologies (AST)
Within the segment, service business revenues are expected to have witnessed an increase in the fiscal third quarter. The earlier performance of the segment has been impacted by MedTech inventory destocking and the reduction of bioprocessing customer demand, both of which the company cites as short-term situations.
However, STE witnessed positive signs of recovery in the MedTech demand in the fiscal second quarter, reflecting an improving procedure environment and the burndown of customer inventory in the United States. We assume this trend to have continued in the to-be-reported quarter also, benefiting STERIS’ revenues.
Per our model, the projected revenues of the AST segment for the fiscal third quarter are likely to have improved 11.4% year over year.
Life Sciences
We expect the segment to have benefited from the timing of capital shipments, thereby favoring its revenues. STERIS boasts a positive outlook on the long-term trends driving demand for aseptic manufacturing in biopharma. This may have contributed to its revenues in the to-be-reported quarter.
Our model projects the segment’s revenues for the fiscal third quarter to increase 16.3% compared to the last fiscal year’s quarter.
Dental
During the fiscal second quarter, the division faced challenges relating to the customer destocking of inventory, particularly for infection control products. At the same time, the business demonstrated the ability to sequentially improve margins, delivering EBIT margins above the total company. We expect this development to have benefitted STERIS’ top line as well in the fiscal third quarter.
Per our model, the projected revenues of the Dental segment for the fiscal third quarter are expected to have improved 6.3% year over year.
Q3 Estimates
The Zacks Consensus Estimate for STERIS’ third-quarter fiscal 2024 revenues is pegged at $1.34 billion. This suggests an increase of 10.1% from the year-ago reported figure.
The Zacks Consensus Estimate for its third-quarter fiscal 2024 EPS of $2.16 indicates a year-over-year rise of 6.9%.
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 higher chance of beating estimates, which is not the case here.
Earnings ESP: STERIS has an Earnings ESP of -0.15%. 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 #4 (Sell).
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter:
GoodRx GDRX has an Earnings ESP of +15.9% and a Zacks Rank #2. The company is expected to release its fourth-quarter 2023 results on Feb 29. You can see the complete list of today’s Zacks #1 Rank stocks here.
GDRX has an expected earnings growth rate of 14.3% compared to the S&P 500’s 4.9%. GDRX surpassed earnings in three of the trailing four quarters and broke even in one, the average being 18.3%.
Merit Medical Systems MMSI has an Earnings ESP of +3.68% and a Zacks Rank #2. The company is expected to release fourth-quarter 2023 results on Feb 28.
MMSI has an expected earnings growth rate of 10.4% compared to the S&P 500’s 4.9%. The company surpassed earnings in each of the trailing four quarters, the average being 14.41%.
Sarepta Therapeutics SRPT currently has an Earnings ESP of +52.45% and a Zacks Rank #2. The company is expected to release its fourth-quarter 2023 results on Feb 27.
SRPT has an expected earnings growth rate of 132.6% compared to the industry’s 11.1%. In the last reported quarter, the company delivered an earnings surprise of 72.3%.
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Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
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STERIS plc (STE) : Free Stock Analysis Report
GoodRx Holdings, Inc. (GDRX) : Free Stock Analysis Report
