STERIS plc STE reported third-quarter fiscal 2026 adjusted earnings per share (EPS) of $2.53, up 9% from the year-ago quarter’s figure. The figure matched the Zacks Consensus Estimate.
The adjustment excludes the impacts of certain non-recurring charges, such as the amortization of acquired intangible assets and acquisition and integration-related charges.
The company’s GAAP EPS was $1.96, up 12% from the year-ago level of $1.75.
STE’s Q3 Revenues in Detail
Revenues of $1.50 billion from continuing operations increased 9.5% year over year. The figure surpassed the Zacks Consensus Estimate by 1.1%.
Organic revenues at constant exchange rate or CER rose 8% year over year.
Following the earnings announcement, STE stock fell 3.6% in after-market trading yesterday. The decline was likely due to investor concerns over the contraction in gross margins.
STE’s Quarterly Performance in Detail
The company operates under three segments — Healthcare, Applied Sterilization Technologies (“AST”) and Life Sciences.
Revenues at Healthcare rose 9% year over year to $1.10 billion (up 8% on a CER organic basis). This reflected an 11% improvement in service revenues, 8% growth in consumable revenues and a 7% rise in capital equipment revenues. The Zacks Consensus Estimate for revenues implies an improvement of 8.1% from the year-ago reported figure.
Revenues from AST improved 11% to $286.6 million (up 8% on a CER organic basis). This reflected 9% growth in service revenues and 103% growth in capital equipment revenues. The Zacks Consensus Estimate for revenues implies an increase of 8.1% year over year.
Revenues from the Life Sciences segment increased 7% to $145.8 million (up 5% year over year on a CER organic basis). This reflected 11% growth in consumable revenues, 7% growth in capital equipment revenues and flat service revenues. The Zacks Consensus Estimate for revenues suggests an increase of 8% year over year.
Margins
The gross profit in the reported quarter was $655.5 million, up 7.4% from the prior-year level. The gross margin contracted 72 basis points (bps) year over year to 43.8% due to a 10.6% increase in the cost of revenues.
STERIS witnessed a 5% year-over-year rise in selling, general and administrative expenses. The figure amounted to $352.3 million. Research and development expenses rose 7.7% to $29.5 million. Adjusted operating expenses totaled $381.8 million, up 5.2% year over year. The adjusted operating margin expanded 23 bps to 18.3%.
STERIS plc Price, Consensus and EPS Surprise
STERIS plc price-consensus-eps-surprise-chart | STERIS plc Quote
Financial Details
STERIS exited the third quarter of fiscal 2026 with cash and cash equivalents of $423.7 million compared with $319.2 million at the end of the fiscal second quarter.
Cumulative net cash provided by operating activities at the end of the fiscal third quarter was $1.01 billion compared with $887.3 million in the year-ago period. Further, the company has a five-year annualized dividend growth rate of 9.94%.
Guidance
STERIS has maintained its 2026 financial guidance.
It still expects revenues from continuing operations to increase approximately 8-9%. The Zacks Consensus Estimate is pegged at $5.93 billion, implying 8.6% growth from fiscal 2025.
Constant currency organic revenues are expected to improve approximately 7-8%.
Adjusted EPS is expected to be in the range of $10.15-$10.30. The Zacks Consensus Estimate for the metric is pegged at $10.23.
Our Take
STERIS ended third-quarter fiscal 2026 on a mixed note, with earnings meeting estimates and revenues beating the same. All business segments experienced growth during the quarter. High single digit top-line growth, combined with cost discipline, is driving meaningful EPS growth despite increased tariff headwinds.
Meanwhile, the expansion of operating margin bodes well for the stock.
STE’s Zacks Rank & Key Picks
STE currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are National Vision EYE, Boston Scientific BSX and Prestige Consumer Healthcare PBH.
National Vision, currently carrying a Zacks Rank #2 (Buy), reported third-quarter 2025 adjusted EPS of 13 cents, which topped the Zacks Consensus Estimate by 8.3%. Revenues of $487.3 million beat the Zacks Consensus Estimate by 2.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EYE’s earnings yield of 5.8% compares favorably with the industry’s 2.8% yield. The company beat on earnings in each of the trailing four quarters, with the average surprise being 2.75%.
Boston Scientific, carrying a Zacks Rank #2 at present, posted fourth-quarter 2025 adjusted EPS of 80 cents, which exceeded the Zacks Consensus Estimate by 2.6%. Revenues of $5.29 billion surpassed the Zacks Consensus Estimate by 0.4%.
BSX has an earnings yield of 3.7% compared with the industry’s 2.3% yield. The company’s earnings outpaced estimates in each of the trailing four quarters, with the average surprise being 7.4%.
Prestige Consumer Healthcare, carrying a Zacks Rank #2 at present, reported a second-quarter fiscal 2026 EPS of $1.07, which surpassed the Zacks Consensus Estimate by 10.3%. Revenues of $274.1 million topped the Zacks Consensus Estimate by 6.9%.
PBH has an earnings yield of 7.1% compared with the industry’s 2.8% yield. The company’s earnings outperformed estimates in three of the trailing four quarters and missed in the other one, with the average surprise being 2.8%.
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This article originally published on Zacks Investment Research (zacks.com).