STE changes
Pick any two versions below to diff them.
- Price
- $227.12 → $256.27(+12.8%)
- Discount category
- Close to intrinsic value → Pricey
- Next earnings
- Nov 4, 2026 → Feb 4, 2027
- Next earnings is estimate
- No → Yes
- Thesis
- The market prices STERIS for slower growth in its higher-margin AST business, for tariff costs and for the cost of its new Xodus purchase. AST revenue grew only 5% at constant currency in removed: Q1 added: Q2 fiscal 2027, removed: and its capital equipment revenue fell removed: 13%. added: 21%, and STERIS cut its fiscal 2027 AST growth outlook to 6% to 7% from 7% to 8%. Ethylene oxide sterilization faces stricter US environmental rules. Tariffs raise costs in Healthcare. On October 11, 2026, STERIS agreed to buy Xodus Medical for $2.1 billion in cash, mostly with new debt, for a business with expected 2026 revenue of about $245 million. removed: Results are on plan: added: The rest of the company is strong: in removed: Q1 added: Q2 fiscal 2027, revenue rose removed: 7%, added: 9%, constant currency organic growth was removed: 6% added: 8%, Life Sciences revenue rose 18% and adjusted EPS rose to removed: $2.59 added: $2.94 from removed: $2.34. added: $2.47. STERIS raised its fiscal 2027 adjusted EPS guidance to $11.35 to $11.55, which includes about $0.18 per share of tariff refunds. For the gap to close, three things must be true. STERIS must reach its fiscal 2027 guidance of 6% to 7% constant currency organic growth and adjusted EPS of removed: $11.10 added: $11.35 to removed: $11.30. added: $11.55. AST growth must speed up as medical device makers increase volumes. The Xodus purchase must close by the end of 2026 and add to growth and margins, as STERIS expects. The removed: Q2 added: close of the Xodus purchase and the Q3 fiscal 2027 report, removed: on November 4, 2026, is added: expected in early February 2027, are the next removed: test. added: tests. The fiscal 2028 outlook in May 2027 is the main test. If these checks pass, the gap can close over the next three to five quarters. The main reason it may not close is a long slowdown in AST demand from medical device makers.
- Risks
- AST depends on the volumes of medical device makers. added: AST service revenue grew only 5% in Q2 fiscal 2027, and STERIS cut its AST growth outlook in November 2026. Lower volumes or stricter rules on ethylene oxide emissions can slow growth and raise costs in this high-margin segment. The Xodus purchase adds about $2 billion of debt. If Xodus grows more slowly than STERIS expects, the return on the purchase price can be low. Tariffs raise the cost of parts and products that STERIS moves across borders, and STERIS may not pass all of these costs to customers. Hospital budgets drive sales of capital equipment. Lower hospital spending can delay orders for sterilizers, tables and lights.
- Balance sheet
- Cash: removed: $482M added: $531M Debt: $1.9B Net debt: $1.4B added: Interest cover: 22× Undrawn credit line: removed: $1.1B, added: $1.6B, to removed: October 2029 added: November 2031 Debt due within 12 months: $243M Last debt due: 2051 At removed: June added: September 30, 2026, STERIS had cash and cash equivalents of removed: $482.3 added: $531.1 million and total debt of $1.89 removed: billion. The added: billion: short-term debt removed: was $1.35 billion of added: $243.1 million and long-term debt of $1,650.3 million. The debt is mostly senior public notes, removed: including added: such as the 2.700% notes due 2031 and added: the 3.750% notes due 2051, and removed: $557.1 million of private placement senior removed: notes, of which $243.4 million was due within 12 months. Nothing was drawn on the $1.1 billion revolving credit facility, which ends in October 2029. added: notes. Total equity was removed: $7.22 added: $7.27 billion. removed: Net added: In the first six months of fiscal 2027, net cash from operations was removed: $367.1 added: $656.1 million and free cash flow was removed: $279.6 added: $492.5 million, and STERIS spent $215.9 million added: on share buybacks and $128.4 million on dividends. Interest cover is income from operations of $580.1 million divided by interest expense of $26.9 million in removed: Q1 fiscal 2027. added: the same six months. On November 4, 2026, STERIS replaced its $1.1 billion revolving credit facility with a new $1.6 billion facility that ends on November 4, 2031, with no borrowings at signing. It also signed a delayed draw term loan of up to $500 million that it can use only for the Xodus purchase. The Xodus purchase of $2.1 billion, expected to close by December 31, 2026, will be paid mostly with new debt, and added: in October 2026 STERIS removed: has added: had a $2.0 billion bridge loan commitment for it. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- Nov 4, 2026: Q2 fiscal 2027 earnings: AST growth. removed: Pending. added: Failed. Watch: Organic growth on track for the 6% to 7% guidance and faster AST service growth pass; a cut to the guidance or slower AST growth fails. added: Outcome: Constant currency organic growth of 8% kept the 6% to 7% guidance on track, but AST service revenue grew only 5% and STERIS cut its fiscal 2027 AST growth outlook to 6% to 7% from 7% to 8%. Dec 31, 2026 (estimate): Xodus purchase closes. Pending. Watch: A close by December 31, 2026, with debt financing on good terms, passes; a delay or a regulatory challenge fails. added: Feb 4, 2027 (estimate): Q3 fiscal 2027 earnings: AST growth and the Xodus outlook. Pending. Watch: AST constant currency organic growth of 6% or more and a fiscal 2027 outlook with Xodus that keeps the adjusted EPS guidance pass; slower AST growth or a lower outlook fails.
- Recent events
- added: Nov 4, 2026: STERIS reported Q2 fiscal 2027 results. Revenue rose 9% to $1.59 billion, and constant currency organic growth was 8%. Adjusted EPS was $2.94, up from $2.47, with a pre-tax benefit of about $20 million from tariff refunds. Healthcare revenue rose 9%, AST revenue rose 5% and Life Sciences revenue rose 18%. STERIS raised its fiscal 2027 adjusted EPS guidance to $11.35 to $11.55 from $11.10 to $11.30, kept its guidance of 6% to 7% constant currency organic growth, and cut its AST growth outlook to 6% to 7% from 7% to 8%. It also approved a second restructuring plan, with charges of about $45 million. Nov 4, 2026: STERIS signed a new $1.6 billion revolving credit facility that ends on November 4, 2031, in place of its $1.1 billion facility. It also signed a delayed draw term loan of up to $500 million, which it can use only for the Xodus purchase. Oct 11, 2026: STERIS agreed to buy Xodus Medical, a maker of single-use surgical products such as the Pink Pad patient positioning system, for $2.1 billion in cash, plus up to $150 million based on 2028 targets. STERIS expects Xodus to have 2026 revenue of about $245 million. It will pay mostly with debt and has a $2.0 billion bridge loan commitment. It expects the deal to close by December 31, 2026. Aug 5, 2026: STERIS reported Q1 fiscal 2027 results. Revenue rose 7% to $1.5 billion, and constant currency organic growth was 6%. Adjusted EPS was $2.59, up from $2.34. Healthcare revenue rose 8%, AST revenue rose 6% and Life Sciences revenue rose 9%. STERIS kept its fiscal 2027 guidance. Aug 5, 2026: STERIS announced a plan to move its US chemistry manufacturing and distribution to a new site in North Carolina and close sites in St. Louis, Missouri, and Plymouth, Minnesota. It expects pre-tax charges of $55 million to $70 million through fiscal 2030. May 11, 2026: STERIS reported fiscal 2026 results. Revenue from continuing operations rose 9% to $5.9 billion, and adjusted EPS was $10.17. For fiscal 2027, it guided for 6% to 7% constant currency organic growth, adjusted EPS of $11.10 to $11.30 and free cash flow of about $850 million. The board authorized a new $1 billion share buyback program.