STE Stock Study (10-6-26)

Posted by Mark on September 14, 2026 at 06:59 | Last modified: October 6, 2026 11:42

I recently studied Steris plc (STE) with a closing price of $211.07.

M* writes:

     > Steris is an Ireland-domiciled medical technology company focused
     > on sterilization services and infection prevention. The company is
     > the global leader in contract sterilization services, ensuring the
     > safe delivery of single-use and implantable medical equipment to
     > hospitals around the world. Steris also sells sterilizers,
     > washer-disinfectors, and other decontamination equipment and
     > supplies for use by care provider facilities and in biopharma
     > manufacturing sites. Domiciled in the United States before its
     > inversion to Ireland, the firm derives approximately 70% of its
     > revenue from Healthcare Services, 20% from Applied Sterilization
     > Technologies… and 10% from life sciences services after the
     > divestment of its dental products business.

Over the past decade, this medium-size company grows sales and earnings at annualized rates of 11.2% and 11.3% [FY ends Mar 31; number incremented by one to match from BI website and Value Line (VL)]. Lines are mostly up, straight, and parallel except for a deep COVID-19 EPS decline from ’20-’22 followed by resumption of previous trend. Ten- (5-) year earnings R^2 is 0.24 (0.61) and VL gives an Earnings Predictability score of 80. Shares outstanding notably increase 14.6% (1.5%/year).

Over the past decade, PTPM trails industry averages but roughly matches peers while increasing from 7.1% to 17.6% (’26) with a last-5-year mean of 11.2%. ROE edges out peer and industry averages while increasing from 3.9% to 10.8% (’26) with a lackluster last-5-year mean of 6.9% (shareholder equity positive and growing 11.0% per year). Debt-to-capital is less than peer and industry averages while falling from 34.6% to 22.5% (’26) with a last-5-year mean of 30.2%.

Quick ratio is 1.2 and interest coverage 18.8 per M* who assigns “Narrow” Economic Moat, gives a “Standard” rating for Capital Allocation, and an A grade for Financial Health (per BI website). VL gives an A grade for Financial Strength.

RightStock—a new tool on the BI website that I am tracking for informational purposes—gives a fitness score of 69 [“limited fit” citing weak/declining earnings, with which I disagree, and excellent sales/EPS growth alignment (seems puzzling at 6.3% vs. 50.3%)] and opportunity score of 89 (“excellent”).

With regard to sales growth:

• YF gives YOY ACE 7.3% and 6.3% for ’27 and ’28 (based on 9 analysts).
• Zacks gives YOY ACE 7.3% and 6.5% for ’27 and ’28 (3 analysts).
• VL projects 5.7% growth per year from ’26-’31.
• CFRA projects 9.0% YOY and 6.3% per year for ’27 and ’26-’28, respectively.
• M* gives a 2-year ACE of 6.7% while projecting 6.3% per year from ’26-’31 in Equity Report.

My 5.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 9.6% and 9.7% per year for ’26-’28 and ’26-’29 (based on 12 analysts).
• Nasdaq.com gives annualized ACE of 9.4% and 9.1% for ’27-’29 and ’27-’30 [3 / 1 / 1 analyst(s) for ’27 / ’29 / ’30].
• Finviz gives 5-year annualized ACE of 9.8% (4).
• YF gives ACE YOY 9.8% and 9.6% for ’27 and ’28, respectively (9).
• Zacks gives ACE YOY 9.3% and 9.1% for ’27 and ’28, respectively (3).
• VL projects 5.8% growth per year from ’26-’31.
• CFRA projects 12.3% YOY and 9.0% per year for ’27 and ’26-’28, respectively.
• M* gives long-term ACE of 11.0% and projects 8.6% per year from ’26-’31 in Equity Report.

My 5.0% per year forecast is below the long-term-estimate range (mean of four: 8.8%). Initial value is ’26 EPS of $7.93/share rather than 2027 Q1 EPS of $8.18 (TTM).

My Forecast High P/E is 34.0. Over the past 10 years, high P/E falls from 58.3 to 34.0 (’26) with last-5-year mean (excluding triple-digit outliers in ’21 and ’22) of 40.0 and a last-5-year-mean average P/E (excluding corresponding low P/E upside outliers) of 35.1. I am near bottom of the range (only 28.4 in ’17 is less).

My Forecast Low P/E is 20.0. Over the past 10 years, low P/E falls from 49.4 to 25.8 (’26) with a last-5-year mean (excluding 75.8 in ’21 and 149 in ’22) of 30.2. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $158.60 is default based on initial value from above: 24.9% less than previous close and 18.7% less than the 52-week low.

Over the past decade, payout ratio (PR) falls from 85.2% to 31.0% (’26) with a last-5-year mean (excluding 172% in ’22) of 43.0%. My 30.0% forecast is below the range.

These inputs land STE in the HOLD zone with a U/D ratio of 2.5. Total Annualized Return (TAR) is 11.1%.

PAR (using Forecast Average—not High—P/E) of 6.4% is less than I seek for a medium-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Although the sample size of 10 (my study and one other outlier excluded) is too small for anything but anecdotal comparison, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 7.0%, 9.0%, 30.0, 20.0, and 52.4%, respectively. VL projects a future average P/E of 25.0 that is equal to MS and less than mine (27.0).

MS high / low EPS are $12.95 / $8.18 versus my $10.12 / $7.93 (per share). My high EPS is less due to a lower growth rate. VL (M*) high EPS of $13.50 ($13.37) is greater than both.

MS LSPF of $170.80 implies a Forecast Low P/E of 20.9: higher than the above-stated 20.0. MS LSPF is 4.4% greater than the default $8.18/share * 20.0 = $163.60 resulting in more aggressive zoning. MS LSPF is also 7.7% greater than mine.

MOS is strong in the study because my inputs are near or below historical/analyst estimates and ranges except VL future average P/E. MS TAR exceeds mine by 1.9% per year.

With regard to valuation, PEG is 1.3 and 4.9 per M* and my projected P/E, respectively: overvalued on average. Relative Value [(current P/E) / 5-year-mean average P/E] is cheap at 0.74. “Quick and dirty” cash flow (excluding capex, which Google AI says is wrong) has stock undervalued by 22%. M* reports stock at 13% discount.

Per U/D, STE is a BUY under $205/share. Given forecast high price ~$344, [344.1 / ((13.97 / 100 ) +1 ) ^ 5] ~ $179 meets the BetterInvesting® TAR criterion.

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