STERIS Reports Strong Q3 Results with Revenue Growth

Written by Emily J. Thompson, Senior Investment Analyst

Source: Newsfilter

Updated: 4d ago

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Should l Buy STE?

Source: Newsfilter

STERIS plc's stock fell 9.01% as it hit a 20-day low amid broader market weakness, with the Nasdaq-100 down 0.80% and the S&P 500 down 0.78%.

Despite the decline in stock price, STERIS reported strong Q3 results, with a 9% year-over-year increase in revenue, reaching $1.5 billion. The earnings per share improved to $2.53, reflecting effective cost control and revenue growth strategies. The healthcare segment also performed well, indicating sustained demand in the medical equipment sector.

The strong financial performance highlights STERIS's competitive position in the market, although the stock's decline may be attributed to sector rotation as investors react to broader market trends.

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About STE

STERIS Plc is a provider of products and services that support patient care with an emphasis on infection prevention. Its segments include Healthcare, Applied Sterilization Technologies (AST), and Life Sciences. Its Healthcare segment provides a comprehensive offering for healthcare providers worldwide, focused on sterile processing departments and procedural centers, such as operating rooms and endoscopy suites. AST segment supports medical device and pharmaceutical manufacturers through a global network of contract sterilization and laboratory testing facilities, and integrated sterilization equipment and control systems. Its Life Sciences segment provides a comprehensive offering of products and services designed to support biopharmaceutical and medical device research and manufacturing facilities, in particular those focused on aseptic manufacturing. Its portfolio includes a full suite of consumable products, equipment maintenance, specialty services, and capital equipment.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.

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Revenue Growth: STERIS plc reported a 9% year-over-year increase in total revenue for Q3, with constant currency organic revenue growing 8%, primarily driven by volume increases and a 200 basis point price rise, indicating strong market performance.
Margin Pressure: Despite revenue growth, gross margin declined by 70 basis points to 43.9%, primarily due to increased tariffs and inflation, although productivity and volume improvements partially offset this pressure, reflecting challenges in cost control.
Profitability Maintained: Adjusted net income reached $249.4 million, with earnings per diluted share at $2.53, a 9% increase from the prior year, indicating the company's ability to maintain profitability amid external pressures, even as EBIT margin decreased to 22.9%.
Outlook Reaffirmed: The company reaffirmed its fiscal 2026 revenue growth outlook of 7% to 8% and earnings per share guidance of $10.15 to $10.30, although the likelihood of achieving the higher end of this range is reduced due to an additional $10 million in tariffs, demonstrating management's cautious stance on future performance.

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Earnings Performance: Steris reported a non-GAAP EPS of $2.53 for Q3 2026, aligning with market expectations, which indicates the company's consistent ability to maintain profitability amidst industry challenges.
Revenue Figures: The company achieved revenues of $1.1 billion in the third quarter, showcasing robust sales growth that reflects its strong market position in the medical device sector despite external pressures.
Market Short Trends: In October, short bets on the S&P 500 healthcare sector rose to 2.00%, indicating a cautious sentiment among investors that could lead to increased volatility in Steris's stock price.
Ratings and Historical Data: Seeking Alpha's Quant Rating on Steris, along with its historical earnings data, provides valuable insights for investors to assess the company's financial health and future growth potential.