STERIS plc STE posted fourth-quarter fiscal 2026 adjusted earnings of $2.83 per share, up 3.3% year over year. The bottom line missed the Zacks Consensus Estimate by 0.9%.
On a GAAP basis, earnings per share (EPS) were $2.24 compared with $1.48 cents in the prior-year quarter.
HAE posted adjusted earnings per share of $10.17 for fiscal 2026, up from $9.22 in fiscal 2025.
STE’s Revenues
Total revenues from continuing operations rose 7.3% to $1.59 billion but lagged the Zacks Consensus Estimate of $1.60 billion by 0.5%.
Organic revenues at constant exchange rate or CER rose 5% year over year.
For fiscal 2026, the company generated total revenues of $5.94 billion, up 8.8% from the prior-year figure.
Following the earnings announcement, STE stock fell 0.9% in after-market trading yesterday. The decline was likely due to investor concerns over the company’s modest top and bottom-line misses.
STE Reports Broad-Based Segment Growth
Healthcare remained the primary growth engine. Segment revenues increased 7% year over year to $1.14 billion, reflecting a 9% improvement in service revenues, 7% growth in consumable revenues and a 6% increase in capital equipment revenues.
Applied Sterilization Technologies (“AST”) also advanced, with revenues up 6% to $289.2 million, reflecting 10% growth in service revenues and a 62% decline in capital equipment revenues.
Life Sciences posted the fastest percentage growth, rising 9% to $162.9 million, supported by 19% growth in capital equipment, an 8% rise in service revenues and a 5% improvement in consumable revenues.
STE’s Modest Margin Profile Improvement
Gross profit increased to $697.1 million from $641.2 million in the prior-year quarter. Gross margin expanded 57 basis points (bps) year over year to 43.9%, despite a 6.2% rise in cost of revenues.
Selling, general and administrative expenses increased 5.4% to $351.8 million and research and development expenses rose 4% to $28.8 million. Total operating expenses declined to $380.3 million, aided by the absence of the Illinois EO litigation settlement recorded in the prior-year quarter and a restructuring credit in the current period. The adjusted operating margin contracted 61 bps to 24.2%.
STERIS plc Price, Consensus and EPS Surprise
STERIS plc price-consensus-eps-surprise-chart | STERIS plc Quote
STERIS’ Financial Details
STERIS ended fiscal 2026 with a significantly higher cash position. Cash and cash equivalents totaled $439.6 million compared with $171.7 million a year ago, providing added flexibility for shareholder returns and reinvestment.
For fiscal 2026, net cash provided by operating activities was $1.34 billion compared with $1.15 billion a year ago. The company has a five-year annualized dividend growth rate of 9.94%.
STE Issues Fiscal 2027 Outlook
Looking ahead, STE expects fiscal 2027 as-reported revenue growth of 7-8%. Constant currency organic revenue growth is projected to be 6-7%. The Zacks Consensus Estimate is pegged at $5.94 billion, implying 8.8% growth from fiscal 2025.
Adjusted diluted earnings per share are forecasted to be in the range of $11.10-$11.30, implying 9-11% growth from fiscal 2026 adjusted EPS. The Zacks Consensus Estimate for the metric is pegged at $10.21.
Our Take
STERIS ended fourth-quarter fiscal 2026 with weaker-than-expected results, with both earnings and revenues missing their respective estimates. The expansion of gross margin looks encouraging.
The quarter reflected steady procedure-driven demand and broad segment growth, while management flagged tariffs and inflation as notable offsets. Total backlog from continuing operations ended the quarter at $490.7 million, providing a tangible view of near-term demand visibility.
However, the contraction of operating margin does not bode 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 Alcon ALC, Intuitive Surgical ISRG and Phibro Animal Health PAHC.
Alcon, currently carrying a Zacks Rank #2 (Buy), reported a fourth-quarter 2025 EPS of 78 cents, which missed the Zacks Consensus Estimate by 0.8%. Revenues of $2.70 billion missed the Zacks Consensus Estimate by 0.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ALC has an earnings yield of 2.5% compared to the industry’s negative 1.6% yield. The company’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.11%.
Intuitive Surgical, carrying a Zacks Rank #2 at present, posted a first-quarter 2026 adjusted EPS of $2.50, which exceeded the Zacks Consensus Estimate by 20.2%. Revenues of $2.77 billion topped the Zacks Consensus Estimate by 6.2%.
ISRG has an earnings yield of 2.1% in contrast to the industry’s negative yield of 0.9%. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 16.82%.
Phibro Animal Health, carrying a Zacks Rank #2 at present, posted a second-quarter fiscal 2026 adjusted EPS of 87 cents, which outpaced the Zacks Consensus Estimate by 27.01%. Revenues of $373.9 million outperformed the Zacks Consensus Estimate by 4.72%.
PAHC has an estimated long-term earnings growth rate of 21.5% compared with the industry’s 12.1% growth. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 20.15%.
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STERIS plc (STE): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).