STERIS plc STE is gearing up to unveil its first-quarter fiscal 2025 results on August 6.
A Track Record of Earnings Surprises
STERIS has consistently outperformed expectations in its earnings, with three beats out of the past four quarters and an average surprise of 2.21%.
In the most recent quarter, the company reported adjusted earnings per share in line with the Zacks Consensus Estimate at $2.41.
Insights into Q1 Estimates
The Zacks Consensus Estimate predicts STERIS’ first-quarter fiscal 2025 revenues to reach $1.26 billion, reflecting a slight dip of 1.7% from the previous year.
Meanwhile, the projected EPS of $2.03 indicates a modest 1.5% year-over-year increase.
Expectations and Trends Before Earnings
Leading up to the earnings release, analysts have maintained a steady estimate of $2.03 per share for STERIS’ fiscal first-quarter earnings in the last 30 days.
Let’s delve into the factors that have influenced STERIS’ performance in key segments.
Analysis of Key Factors
Healthcare Segment
STERIS experienced robust growth in capital equipment, consumables, and services in the previous quarter, driven by favorable pricing and efficiency. Despite macroeconomic challenges, the Healthcare division is anticipated to sustain its momentum into the current quarter.
The normalization of Healthcare backlogs and strategic restructuring initiatives are likely to bolster the segment’s revenues by 7.1% from the prior year.
Applied Sterilization Technologies (AST)
The AST segment faced challenges due to temporary MedTech inventory adjustments and decreased bioprocessing demand, signaling short-term issues. Recovery in MedTech demand and gradual improvement in procedures are anticipated to positively impact the segment’s performance going forward.
Revenue projections for AST suggest a 6.4% year-over-year increase in the fiscal first quarter.
Life Sciences Division
The divestiture of the Controlled Environmental Services business within the Life Sciences unit is expected to influence revenue outcomes for the quarter positively. With the segment aligning with long-term expectations, steady performance is expected to continue.
Revenue forecasts for the Life Sciences segment anticipate a 5.8% growth compared to the previous year.
Dental Business Update
Recent divestment of the Dental segment has injected capital into STERIS, strengthening its financial position. The one-month sales contribution from the Dental business in the first quarter is expected to reflect positively on the company’s financials.
Forecasting STERIS’ Performance
According to our model, the likelihood of a stock beating estimates is higher with a Zacks Rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) coupled with a positive Earnings ESP. However, STERIS falls short in this aspect with an Earnings ESP of 0.00% and a Zacks Rank of #2.
For investors seeking potential prospects, consider these medical stocks that exhibit promise in the upcoming earnings season:
Hims & Hers Health HIMS,
TransMedics Group TMDX, and
Tenet Healthcare THC.
Each of these companies presents a unique combination of factors that may result in an earnings beat.