Yahoo Finance Should You Buy STERIS (STE) Stock Ahead of Q4 Earnings?
STERIS plc STE is expected to release fourth-quarter fiscal 2024 results soon.
Earnings Surprise History
STE has a strong earnings surprise history. The company beat earnings estimates in three of the trailing four quarters and missed once, the average surprise being 3.96%.
In the last reported quarter, the company posted adjusted earnings per share (EPS) of $2.22, which exceeded the Zacks Consensus Estimate by 2.30%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Healthcare
The Healthcare arm of STERIS is likely to have continued its strong momentum in the fiscal fourth 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 finally normalized, 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 customer demand.
Our model projects the segment’s revenues for the fiscal fourth quarter to improve 6.6% from the year-ago reported figure.
STERIS plc Price and EPS Surprise
STERIS plc price-eps-surprise | STERIS plc Quote
Applied Sterilization Technologies (AST)
Within the segment, the earlier performances were impacted by MedTech inventory destocking and the reduction of bioprocessing customer demand, both of which the company cites as short-term situations.
However, STE has been witnessing signs of recovery in the MedTech demand over the past couple of quarters, 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. However, the company is still apprehensive about bioprocessing volumes and has taken a more conservative approach to its expectations for the fiscal fourth quarter.
Per our model, AST segment revenues for the fiscal fourth quarter are likely to increase 3.6% year over year.
Life Sciences
We expect the segment to have benefited from the timing of capital shipments, 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 fourth quarter to increase 2% compared to the last fiscal year’s quarter.
Dental
During the fiscal third quarter, the division faced challenges relating to reduced orders from a large customer due to a temporary disruption of their operations as a result of a cybersecurity incident they experienced during the quarter. The impact might have lingered in the to-be-reported quarter as well. This apart, the company continues to face hurdles due to a decline in patient volumes and an increase in material cost. We expect this to have impacted the company’s EBIT margin in the fiscal fourth quarter.
Q4 Estimates
The Zacks Consensus Estimate for STERIS’ fourth-quarter fiscal 2024 revenues is pegged at $1.47 billion. This suggests an increase of 5.8% from the year-ago reported figure.
The Zacks Consensus Estimate for its fourth-quarter fiscal 2024 EPS of $2.43 indicates a year-over-year rise of 5.7%.
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 0.00%. 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 #2.
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:
TransMedics Group TMDX has an Earnings ESP of +240.00% and a Zacks Rank #1. The company is expected to release first-quarter 2024 results soon. You can see the complete list of today’s Zacks #1 Rank stocks here.
TransMedics has an expected earnings growth rate of 81.8% for 2024. TMDX surpassed earnings in each of the trailing four quarters, the average being 107.83%.
Inspire Medical Systems INSP has an Earnings ESP of +18.04% and a Zacks Rank #1. The company is set to release first-quarter 2024 results on May 7.
INSP has an expected long-term earnings growth rate of 51.4% compared to the S&P 500’s 17.1%. The company surpassed earnings in each of the trailing four quarters, the average being 353.55%.
Insulet PODD currently has an Earnings ESP of +11.11% and a Zacks Rank #2. The company is set to release its first-quarter 2024 results on May 9.
PODD has an expected long-term earnings growth rate of 18.1% compared with the industry’s 11.4%. The company surpassed earnings in each of the trailing four quarters, the average being 100.09%.
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STERIS plc (STE) : Free Stock Analysis Report
Insulet Corporation (PODD) : Free Stock Analysis Report
Inspire Medical Systems, Inc. (INSP) : Free Stock Analysis Report
TransMedics Group, Inc. (TMDX) : Free Stock Analysis Report
