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what it is
STERIS sells the cleaning, sterilizing, and procedure gear hospitals and labs need to keep work moving safely.
how it gets paid
Last year Steris made $5.5B in revenue.
why it's growing
Revenue grew 6.2% last year. With valuation now firmer, future performance will depend on continued margin expansion, backlog conversion, and sustained demand across key segments.
what just happened
Fiscal Q3 2026 revenue was about $1.5B (up ~9% vs. prior year); adjusted EPS of $2.53 met consensus while revenue beat.
At a glance
A balance sheet — strong enough to weather a downturn
90/100 earnings predictability — you can trust these numbers
25.8x trailing p/e — priced about right
1.0% dividend yield — cash in your pocket every quarter
10.5% return on capital — nothing to write home about
xvary composite: 74/100 — average
What they do
STERIS sells the cleaning, sterilizing, and procedure gear hospitals and labs need to keep work moving safely.
This business wins because hospitals do not bargain-shop infection control when a dirty instrument can shut down a room. Healthcare was 62% of fiscal 2024 revenue, or about $3.4 billion on a $5.5 billion base. Switching costs (changing vendors) are real because your staff, workflows, and compliance habits are built around products that have to work every time.
How they make money
$5.5B
annual revenue · their business grew +6.2% last year
total revenue
$5.5B
+6.2%
The products that matter
infection prevention and sterilization services
Medical Device Sterilization
$5.5B revenue · +6.2%
it generated $5.5B in annual revenue, growing about 6.2%, by doing the unglamorous work hospitals and device makers cannot skip. routine does not sound exciting. routine with regulation attached is usually good business.
core engine
Key numbers
$290
18-month target
That is about 10% above $263.13. So what, most of the easy move already looks priced in.
$1.9B
long-term debt
That is 7% of capital. So what, the balance sheet looks built to absorb normal turbulence.
10.5%
return on capital
Return on capital → profit earned on money invested in the business → so what, this is solid but not elite for a premium multiple.
15.9%
operating margin
Operating margin → what the business keeps after running costs → so what, STERIS has real pricing power but not software-style economics.
Financial health
A
strength
- balance sheet grade A — very strong financial position
- risk rank 2 — safer than 80% of stocks
- price stability 85 / 100
- long-term debt $1.9B (7% of capital)
- net profit margin 16.3% — keeps 16 cents of every dollar in revenue
- return on equity 13% — $0.13 profit for every $1 investors have put in
A with balance sheet grade and risk rank standing out. your money faces less risk here than at most public companies.
Total return vs. market
You invested $10,000 in STE 3 years ago → it's now worth $13,220.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat on revenue
Fiscal Q3 2026 revenue reached $1.5B (up ~9% vs. prior year); adjusted EPS of $2.53 met the consensus.
Annual revenue was $5.5 billion, up 6.2% vs. prior year. Q3 gross margin was about 43.9% (tariffs and inflation offset some pricing gains). Revenue cleared estimates even as the stock sold off on tariff commentary.
$1.5B
revenue
$2.53
eps (adj.)
43.9%
gross margin
the number that mattered
The revenue beat mattered for proof of demand; EPS in line with estimates showed execution on earnings despite tariff headwinds called out on the call.
-
steris posted another strong quarter, prompting management to raise its fiscal year revenue and earnings targets (ends march 31, 2026).performance was broad-based across healthcare, applied sterilization technologies (ast), and life sciences, with pricing, productivity, and volume growth supporting continued margin expansion.
-
free cash flow generation remained robust, reinforcing confidence in the operating model.results benefited from earlier capacity investments that continue to scale efficiently as volumes rise.
-
demand trends across core end markets remain favorable.healthcare services continue to grow at a healthy pace, ast benefits from long-term capacity investments, and life sciences posted strong growth driven by consumables and capital equipment backlog.
-
management remains focused on disciplined execution, capacity expansion, and selective investment to support sustainable growth.backlog levels across multiple segments provide improved visibility into near-term revenue conversion.
-
shares are up roughly 7% in value since our last november report, reflecting improved visibility and consistent execution.with valuation now firmer, future performance will depend on continued margin expansion, backlog conversion, and sustained demand across key segments. cost inflation and tariff impacts remain manageable and are largely embedded in current assumptions. these shares are best suited for conservative accounts looking for exposure to the medical supplies industry. steris is ranked 2 (above average) for safety, and holds high marks for price stability (85), earnings predictability (90), and growth consistency (100).
source: company earnings report, 2026
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What could go wrong
the top risk is sterility failure, product liability, or regulatory action in infection prevention. In this business, one quality issue can become an earnings issue fast.
med
sterility failure and product liability
steris operates where device safety is the product. If a sterilization failure or product issue leads to claims, remediation costs and customer trust both get hit.
impact: a margin hit lands directly on a business earning about 16.3% net margins on $5.5B of revenue.
med
pricing pressure in sterilization and procedural services
This is a sticky market, not a monopoly. If competitors get more aggressive, steris can lose some of the pricing support that helped recent margin expansion.
impact: even modest pricing pressure matters when the stock trades at 25.8x trailing earnings.
med
execution risk on capacity and backlog conversion
Management has been investing in capacity, and the recent bull case leans on that scaling well. If utilization or backlog conversion slows, earnings momentum cools faster than revenue headlines suggest.
impact: the $6B fiscal 2026 revenue expectation starts to look ambitious if that conversion slips.
med
us operating concentration
A significant portion of operations and revenue are tied to the united states. That concentrates regulatory, reimbursement, labor, and operating risk in one market.
impact: concentration means one healthcare system matters a lot to a $5.5B company.
If steris loses pricing power, stumbles on quality, or fails to convert backlog cleanly, you are left with a stock at 25.8x earnings on a business that the market currently treats as unusually dependable.
source: institutional data · regulatory filings · risk analysis
Pay attention to
key metric
the path from $5.5B to $6B
Fiscal 2026 revenue is estimated at $6B. That is about 9% growth from the current base, so this is the cleanest scoreboard on whether momentum is real.
trend
margin follow-through
Full-year net margin is around the mid-teens; watch whether quarterly profitability holds as tariffs and costs move through the P&L.
next catalyst
raised guidance versus delivered guidance
Management raised targets. Now the question is simple: do the next quarters keep validating those higher numbers.
risk
quality or regulatory noise
This is a regulated healthcare workflow company. One safety, compliance, or liability issue can change the story faster than a routine miss on revenue.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts see a normal setup here, not a stock with unusual short-term thrust.
risk profile
above average
stability score 2 — safer than roughly 80% of stocks, which fits a predictable healthcare workflow business.
chart momentum
average
technical score 3 — the chart is behaving like the broader market, with no obvious momentum breakout.
earnings predictability
90 / 100
management tends to deliver what it signals. That lowers drama, but it also means surprises are harder to come by.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 427 buyers vs. 350 sellers in 3q2025. total institutional holdings: 92.2M shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$224
$356
$263
current price
$290
target midpoint · +10% from current · 3-5yr high: $390 (+50% · 11% ann'l return)
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