STERIS plc (STE): what the price assumes

In the published model solve dated 2026-Q2, anchored at $233.78, STERIS plc (STE) is priced for +16.1% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/STE

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.6%); the inversion above states its own rate.

Per-Model Detail (n=13)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• STERIS is a sterilization and infection-prevention leader whose value is the recurring consumables and service tied to its installed base, growing about 9% across all three segments with Applied Sterilization Technologies up 13% in the first quarter.
• The biggest risk is valuation against a rising cost base: at about 27 times trailing earnings only peer-multiple and growth methods reach the roughly $215.89 price, while a raised tariff hit of about $45 million kept management from lifting EPS guidance even as it raised revenue.
• Watch whether the 8% to 9% revenue growth converts to the held $9.90 to $10.15 adjusted EPS, hospital capital-spending trends that seed future consumables, and the tariff drag; the balance sheet is strong with interest coverage above 18 times and about $820 million of expected free cash flow.

Bull Case

Healthcare-equipment companies are hard to value because the razor and the razorblade get lumped together, and STERIS is worth separating. The durable value is not the sterilizers and surgical tables it sells but the consumables and service that follow them for a decade. The 10-K describes the recurring layer directly, the "deferred revenue balances" from service contracts and the product revenues that "consist of revenues generated from sales of" consumables tied to the installed base. Once a hospital standardizes on STERIS sterilization, the detergents, indicators, and maintenance contracts recur regardless of the capital-equipment cycle, which is why the business grows steadily through hospital budget swings.

The growth is broad-based and management just raised the bar. First-quarter fiscal 2026 revenue rose about 9% to roughly $1.4 billion, with all three segments contributing: Healthcare up 8% to about $975 million, Applied Sterilization Technologies up 13% to about $281 million, and Life Sciences up 5% to about $135 million. STERIS lifted its full-year revenue-growth outlook to 8% to 9% from 6% to 7% while holding adjusted EPS guidance of $9.90 to $10.15. The Applied Sterilization Technologies segment, which sterilizes medical devices for manufacturers under contract, is the standout: a scarce, capital-intensive service with few credible competitors.

The cash generation funds the compounding. STERIS raised its fiscal 2026 free-cash-flow outlook to about $820 million from $770 million, carries manageable net debt of about $1.5 billion against operating income near $1.1 billion, and enjoys interest coverage above 18 times. The share count has drifted down slightly, and the balance sheet has room for the bolt-on acquisitions that have long extended STERIS's installed base. A business built on recurring consumables and service, growing high-single-digits across every segment, throwing off more than $800 million of free cash flow, is the kind of durable healthcare compounder that earns a premium multiple, and management raising the growth outlook mid-year is the signal the durability is intact.

Bear Case

The moat-erosion case for STERIS is subtle, because the erosion shows up not in lost customers but in the price the market pays for durability that may grow slower than the multiple assumes. The 10-K itself concedes the pressure: healthcare cost-reduction measures "initiated by competitive pressures as well as legislators, regulators and third-party payors" push back on pricing, and hospitals under budget strain defer the capital-equipment purchases that seed the future consumables stream. The recurring razorblade base is durable, but its growth depends on placing new razors, and a prolonged squeeze on hospital capital spending slows the flywheel even if it never reverses it.

Tariffs and input costs are eating into the margin story right now. STERIS raised its estimated fiscal 2026 tariff hit to about $45 million of pre-tax profit, up from $30 million previously, and held adjusted EPS guidance flat even as it raised the revenue outlook, which means the incremental revenue is not dropping through to earnings at the prior rate. A company that raises its sales forecast but not its profit forecast is telling you costs are absorbing the upside.

The valuation is where the caution concentrates. At about $215.89 (July 10, 2026), the asset and earnings-power methods land well below the price, near $50 to $95, because trailing return on invested capital is only about 2.5% on a large capital base built through acquisition-driven goodwill. Only the relative-multiple and growth-DCF methods reach the price. Trailing EPS is about $7.93, so at $215.89 the stock trades near 27 times trailing earnings, and even against management's roughly $10 forward adjusted EPS guidance it is about 21 times a computed forward figure. That is a premium that requires the high-single-digit growth to persist for years while margins hold against tariffs and hospital pricing pressure. The bet the price makes is that the recurring model compounds durably enough to justify a rich multiple, with the earnings-power methods sitting far below as the measure of how much of the price is paying for future durability rather than present returns.

Valuation

STERIS is a durable healthcare compounder the peer-multiple and growth methods justify while the asset and earnings-power methods call expensive. At $215.89 (July 10, 2026), a sector price-to-earnings multiple near 24 times reaches about $192, close to the price, and the discounted cash-flow methods on high-single-digit growth land near $243 to $250, above it, which is why those families support the level. Against them, the earnings-power methods land far lower, a normalized earnings-power value near $50 and free-cash-flow capitalization near $85, and the asset methods near $85 to $95 because trailing return on invested capital is only about 2.5% on an acquisition-built capital base. The gap between the roughly $216 price and the sub-$100 earnings-power reads is the durability premium the market pays for the recurring consumables-and-service model.

The most concrete anchor is the growth the multiple needs. STERIS grew revenue about 9% in the first quarter across all three segments and raised its full-year revenue outlook to 8% to 9% while holding adjusted EPS at $9.90 to $10.15. Trailing EPS of about $7.93 puts the stock near 27 times trailing earnings, and near 21 times the roughly $10 forward adjusted figure, a computed number. The price works if the high-single-digit growth persists and margins hold; it weakens if the tariff drag, now about $45 million of pre-tax profit, or hospital pricing pressure caps the earnings conversion.

Solvency is a genuine strength and bounds the downside. Net debt of about $1.5 billion runs only about 1.37 times pre-tax operating income, interest coverage is above 18 times, and management raised the fiscal 2026 free-cash-flow outlook to about $820 million. The company is not burning cash, and the share count has edged down. The balance sheet removes financial risk and leaves room for the bolt-on deals that extend the installed base, so the downside is valuation, not solvency. A buyer at today's price is underwriting years of durable high-single-digit growth and steady margins from the recurring model, with the earnings-power methods sitting far below as the reminder of how much of the price is forward durability rather than present return on capital.

Catalysts

The first-quarter fiscal 2026 report was the key recent catalyst: revenue up about 9% to roughly $1.4 billion, adjusted EPS of about $2.83 versus $2.74 a year earlier, and growth across all three segments, Healthcare up 8% to about $975 million, Applied Sterilization Technologies up 13% to about $281 million, and Life Sciences up 5% to about $135 million. STERIS raised its full-year revenue-growth outlook to 8% to 9% from 6% to 7%, lifted its free-cash-flow outlook to about $820 million from $770 million, and held adjusted EPS guidance at $9.90 to $10.15.

The swing factor near term is the tariff drag, which management raised to about $45 million of pre-tax profit from $30 million previously, the reason revenue guidance rose while EPS guidance held. The forces to watch through fiscal 2026 are hospital capital-spending trends that seed the future consumables stream, the durability of double-digit growth in the contract-sterilization segment, and whether cost pressure keeps capping the conversion of revenue growth into earnings. The next quarterly report is the checkpoint on that revenue-to-EPS gap.

Peer Cohorts (Per Segment, With Filing Citations)

Healthcare (reported)

• BSX (BOSTON SCIENTIFIC CORP)
• FY2025 10-K: …and may adversely impact our business, financial condition or results of operations. Health care cost containment pressures, government payment and delivery system reforms, changes in private payer policies, and marketplace consolidations could decrease the demand for our products, the prices which customers are…
• FY2025 10-K: …with the U.S. Anti-Kickback Statute, False Claims Act, Physician Payment Sunshine Act and other health care-related laws, as well as FCPA, competition and U.S. and foreign export control, trade embargo and customs laws, as well as similar laws in other jurisdictions. We have received, and in the future may receive,…
• BDX (BECTON DICKINSON & CO)
• FY2025 10-K: Affordable Care Act to impact healthcare coverage, all of which if implemented could adversely affect both the demand and prices customers are willing to pay for our products. Globally, governments in China and other countries continue to use various mechanisms to control healthcare expenditures, including increased…
• FY2025 10-K: …particularly shortages of nursing staff, may affect the prioritization of healthcare services, which could also impact the demand for certain of our products and services. • Our ability to achieve our projected level or mix of product sales, as our earnings forecasts are based on projected sales volumes and pricing…
• GEHC (GE HEALTHCARE TECHNOLOGIES INC.)
• FY2025 10-K: …The increase as a percent of sales was driven by unfavorable mix within our service offerings, and cost inflation, including the impact of incremental tariffs, partially offset by an increase in pricing of our service offerings. Included in our total cost of revenues as part of our product investment was $490 million…
• FY2025 10-K: …or loss of market share if our customers find alternative suppliers, which could also have a material adverse effect on our financial results. Disruptions in deliveries, capacity constraints, production disruptions up- or down-stream, price increases, or decreased availability of raw materials or commodities…
• SNN (Smith & Nephew plc)
• FY2025 20-F: …healthcare approaches and technologies. Decentralised care Facilitating accessible care outside traditional hospital environments. Evolving customer and market dynamics are creating new high-growth opportunities for medical technology companies. Many countries are shifting towards more decentralised care, with an…
• FY2025 20-F: …such as an ageing population and increased physical activity among older adults, continue to boost demand for healthcare services and medical technology products. As the global population ages, there is a corresponding rise in chronic and age-related conditions that require consistent medical attention. Additionally,…
• HAE (HAEMONETICS CORPORATION)
• FY2025 10-K: …care providers; make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities; and/or register their sales representatives. Some states prohibit specified sales and marketing practices, including the provision of gifts, meals, or other items to certain health care providers…
• FY2025 10-K: …group purchasing organizations and national health organizations. Sales representatives target the primary decision-makers within each of those organizations. In fiscal 2025, our ten largest customers accounted for approximately 42% of our net reve nues. We did not have any customers that represented more than 10% of…

Applied Sterilization Technologies (reported)

• WST (WEST PHARMACEUTICAL SERVICES, INC.)
• FY2025 10-K: …Products Segment Our Proprietary Products reportable segment offers elastomers & primary containment, drug delivery devices, integrated systems, and analytical lab services, primarily to biologic, generic, and pharmaceutical drug customers. Our packaging products include stoppers and seals for injectable packaging…
• FY2025 10-K: …from smaller regional companies such as SMC Ltd. to large global assembly manufacturers such as Phillips Medisize. Given the cost pressures they face, many of our customers look to reduce costs by sourcing from low-cost locations. We seek to differentiate ourselves by leveraging our global capabilities and reputation…
• ITGR (INTEGER HOLDINGS CORPORATION)
• FY2025 10-K: …to our internal technology and capability development efforts aimed at providing our customers with differentiated solutions, we also engage outside research institutions for unique technology projects. - 7 - Table of Contents We believe our core business is well positioned because our OEM customers leverage our…
• FY2025 10-K: …targets using the most likely amount method and are updated quarterly. Adjustments to these estimates are recognized in the period in which they are identified. When contracts with customers include consideration payable at the beginning of the contract, the transaction price is reduced at the later of when the…
• BDX (BECTON DICKINSON & CO)
• FY2025 10-K: …could result in lost revenues and damage to our relationships with customers. In addition, many of our products require sterilization prior to sale, and we utilize both BD facilities and third parties for this process. In some instances, only a few facilities are qualified under applicable regulations to conduct this…
• FY2025 10-K: …and extensions sets; closed-system drug transfer devices; hazardous drug detection; conventional and safety hypodermic syringes and needles, anesthesia needles (spinal, epidural) and trays; enteral syringes; and sharps disposal systems. Medication Management Solutions IV medication safety and infusion therapy…
• SYK (STRYKER CORP)
• FY2025 10-K: …technologies and, together with our customers, we are driven to make healthcare better. We offer innovative products and services in MedSurg, Neurotechnology and Orthopaedics that help improve patient and healthcare outcomes. Our products include surgical equipment and surgical navigation systems; endoscopic and…
• FY2025 10-K: …could adversely affect our customer relationships and result in negative publicity. In this regard, the accelerated development and production of products and services to address medical and other requirements could increase the risk of regulatory enforcement actions, product defects or related claims or reputational…
• MDT (Medtronic plc)
• FY2025 10-K: …we expect Neuroscience could be affected by the following: • Continued adoption and growth of our integrated solutions through the AiBLE offering, which integrates spinal implants with enabling technologies (StealthStation, O-arm Imaging Systems, and Midas), Mazor robotics, and UNiD Adaptive Spine Intelligence…
• FY2025 10-K: …a comprehensive line of medical devices and implants used in the treatment of the spine and musculoskeletal system. The division also provides biologic solutions for the orthopedic markets and offers unique and highly differentiated imaging, navigation, power instruments, and robotic guidance systems used in spine…
• MMSI (MERIT MEDICAL SYSTEMS INC)
• FY2025 10-K: …risks of exposing patients to bloodborne pathogens capable of transmitting disease or other potentially infectious materials. Additionally, repeated sterilization to address such risks is not possible because it may adversely affect the quality of the materials used in many of our products and result in the failure…
• FY2025 10-K: …endoprosthesis which is designed to maintain long-term vessel patency in patients with obstructions in the dialysis outflow circuit; ● HeRO® (Hemodialysis Reliable Outflow) Graft, a fully subcutaneous vascular access system, which is intended for use in maintaining long-term vascular access for chronic hemodialysis…
• ICUI (ICU MEDICAL INC/DE)
• FY2025 10-K: …venous catheters; • Tego™ needlefree connector utilized to access catheters for hemodialysis and apheresis applications; and • ClearGuard™, SwabCap™ and SwabTip™ disinfection caps. Oncology Closed System Transfer Devices ("CSTD") and hazardous drug compounding systems are used to prepare and deliver hazardous IV…
• FY2025 10-K: …health record ("EHR"), asset tracking systems, and alarm notification platforms to further enhance infusion safety and efficiency. • PharmGuard™ medication safety software for Medfusion 4000 syringe and CADD-Solis™ pumps allows for customized drug libraries to support the standardization of protocols for medication…
• ZBH (ZIMMER BIOMET HOLDINGS, INC.)
• FY2025 10-K: S.E.T. product category net sales in 2025. Our CMFT product division includes face and skull reconstruction products as well as products that fixate and stabilize the bones of the chest in order to facilitate healing or reconstruction after open heart surgery, trauma or for deformities of the chest. CMFT products…
• FY2025 10-K: …be applied prospectively with an option to apply the guidance retrospectively or through a modified transition approach. Early adoption of this ASU is permitted. We are currently evaluating the impact this ASU will have on our consolidated financial statements. 3. Revenue Recognition We recognize revenue when our…

Life Sciences (reported)

• TMO (THERMO FISHER SCIENTIFIC INC.)
• FY2025 10-K: …clinical, healthcare, academic, and government markets. Life Sciences Solutions includes three primary businesses: biosciences, genetic sciences, and bioproduction. 3 THERMO FISHER SCIENTIFIC INC. Our biosciences business includes reagents, instruments and consumables that help our customers conduct biological and…
• FY2025 10-K: …our customers to make the world healthier, cleaner and safer. We serve customers working in pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, universities, research institutions and government agencies, as well as environmental, industrial, research and development, quality and process…
• DHR (Danaher Corporation)
• FY2025 10-K: …vaccines and gene editing technologies. Additionally, the segment provides products and consumables used to filter and remove contaminants from a variety of liquids and gases in many end-market applications. As discussed in Note 10 to the accompanying Consolidated Financial Statements, during the third quarter of…
• FY2025 10-K: …flexibility, innovation (particularly productivity and sensitivity improvements), product performance and ergonomics, access to an advanced technical expertise, service and support network and the other factors described under the heading "Competition" below. The businesses in Danaher's Biotechnology segment market…
• A (AGILENT TECHNOLOGIES, INC.)
• FY2025 10-K: Life Sciences and Diagnostics Markets and Applied Markets segments, such as: Danaher Corporation, PerkinElmer Inc., Shimadzu Corporation, Thermo Fisher Scientific Inc. and Waters Corporation, as well as numerous niche service providers. We compete on the basis of product performance, reliability, support quality,…
• FY2025 10-K: , electronic commerce and direct sales. 7 Table of Contents Life Sciences and Diagnostics Markets - Manufacturing Our manufacturing supports our diverse product range and customer-centric focus. We assemble highly configurable products to individual customer orders and make standard products to stock. We employ…
• MTD (Mettler-Toledo International Inc.)
• FY2025 10-K: …development and scale-up activities of our customers. Our on-line measurement technologies, based on infrared and laser light scattering, enable customers to monitor chemical reactions and crystallization processes in real time in the lab and plant. In situ samples allow overnight sampling and testing. Additionally,…
• FY2025 10-K: …constraints on the sources and availability of 9 Table of Contents materials. From time to time, we may rely on a single supplier for all of our requirements of a particular component. Supply arrangements for electronic components are generally made globally. Backlog; Seasonality Our manufacturing turnaround time is…
• WAT (Waters Corporation)
• FY2025 10-K: …segment for financial statement purposes. Operations of the Wyatt business are part of the Waters operating segment. Following the closing of the BDS Business Acquisition in February 2026, the Company has reorganized the existing and new business units into the following four segments: Waters Analytical Sciences,…
• FY2025 10-K: …like empty, partial and full viral vector capsids, using up to 100-fold less sample volume than that required by current techniques, and delivering results in less than ten minutes, even at concentrations as low as 1010 vp/mL. This new capability paves the way for real-time characterization of gene therapies during…
• RVTY (REVVITY, INC)
• FY2025 10-K: …talented and engaged employees; • Accelerating transformational innovation through both internal research and development and third-party collaborations and alliances; • Augmenting growth in both of our core business segments, Life Sciences and Diagnostics, through strategic acquisitions and licensing; • Advancing…
• FY2025 10-K: …cell contamination throughout bioprocessing workflows. 8 Table of Contents Brand Names: Our Life Sciences segment offers additional products under various brand names: Accell™, AlphaLISA ® , AlphaPlex ™ , AlphaScreen ® , Alpha™ SureFire ® , AssayMate™, BIOCHIPs™, BioLegend ® , Bioo Scientific ® , BioQule™, Brilliant…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.