STERIS (STE) to Report Q2 Earnings: What's in the Cards?

STERIS plc STE is slated to report second-quarter fiscal 2021 results on Nov 2, before market open.

In the last-reported quarter, the company’s earnings per share (EPS) of $1.31 surpassed the Zacks Consensus Estimate by 35.05%. Moreover, its earnings surpassed the consensus estimate in each of the last four quarters. The trailing four-quarter average earnings surprise was 11.42%.

Let's see how things have shaped up prior to the announcement.

Factors at Play

Just like many other MedTech companies’ July to September monthly performances, STERIS too is expected to have recorded month-wise rebound in sales on gradual lifting of restrictions in many states and regions. Also, this quarter might have experienced better performance related to deferrable procedures with hospitals gradually reopening their non-COVID departments in a full-fledged way and opening up physician offices and clinics.

In this regard, we note that in the last-reported quarter, STERIS’ biggest segment, Healthcare was most impacted by the reduction in deferrable proceduregiven a pull-back of non-COVID procedures. This is expected to have created significant pent-up demand for the company in the fiscal second quarter.

STERIS plc Price and EPS Surprise

STERIS plc Price and EPS Surprise

STERIS plc price-eps-surprise | STERIS plc Quote

Within Applied Sterilization Technologies (AST), we expect increased demand from the company’s core medical device customers to have pumped up sales. With the pandemic-led change in market behavior, we expect continued growth in AST facilities that process PPE like gowns and gloves and medical devices for the home setting like insulin pumps and blood glucose monitors. A reduction in devices for deferrable procedures however might have offset this growth in the yet-to-be-reported quarter.

Within Life Sciences, amid the pandemic scenario, the company might have registered benefit from pharma customers on growing vaccines and biologics businesses in its second quarter.

However, the company’s time-deferrable procedure-related devices like orthopedic implants are expected to have once again reported poor results, reflecting a year-over-year decline in procedure volume. The company’s outsource reprocessing business might have been impacted by a decline in procedures. The instrument repair business is expected to have been dull too.

Q2 Estimates

The Zacks Consensus Estimate for second-quarter fiscal 2021 revenues is pegged at $705.2 million, suggesting 4.3% fall from the year-ago reported figure.

The Zacks Consensus Estimate for the company’s EPS of 1.24 cents suggests 6.1% decline from the year-ago reported figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) along with a positive Earnings ESP has a good chance of beating estimates. However, this is not the case here as you can see:

Earnings ESP: STERIS has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #2.

Stocks Worth a Look

Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

Quidel QDEL has an Earnings ESP of +8.14% and it sports a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

IDEXX Laboratories IDXX has an Earnings ESP of +0.35% and is a Zacks #2 Ranked stock.

SeaSpine Holdings SPNE has an Earnings ESP of +6.67% and it currently carries a Zacks Rank of 2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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