STERIS PLC (STE) Stock Fundamental Analysis
NYSE:STE - New York Stock Exchange, Inc. - IE00BFY8C754 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to STE. STE was compared to 191 industry peers in the Health Care Equipment & Supplies industry. While STE has a great profitability rating, there are some minor concerns on its financial health. STE has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year STE was profitable.
In the past year STE had a positive cash flow from operations.
STE had positive earnings in each of the past 5 years.
STE had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 4.67%, STE belongs to the top of the industry, outperforming 82.72% of the companies in the same industry.
Looking at the Return On Equity, with a value of 7.27%, STE belongs to the top of the industry, outperforming 81.15% of the companies in the same industry.
STE has a Return On Invested Capital of 7.68%. This is amongst the best in the industry. STE outperforms 85.86% of its industry peers.
The Average Return On Invested Capital over the past 3 years for STE is below the industry average of 7.67%.
The last Return On Invested Capital (7.68%) for STE is above the 3 year average (5.03%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.67% | ||
| ROE | 7.27% | ||
| ROIC | 7.68% |
ROA(3y)2.18%
ROA(5y)4.02%
ROE(3y)3.83%
ROE(5y)6.74%
ROIC(3y)5.03%
ROIC(5y)5.94%
1.3 Margins
STE has a better Profit Margin (9.18%) than 83.25% of its industry peers.
In the last couple of years the Profit Margin of STE has declined.
Looking at the Operating Margin, with a value of 18.82%, STE belongs to the top of the industry, outperforming 91.62% of the companies in the same industry.
In the last couple of years the Operating Margin of STE has remained more or less at the same level.
STE has a Gross Margin of 43.38%. This is in the lower half of the industry: STE underperforms 64.40% of its industry peers.
STE's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.82% | ||
| PM (TTM) | 9.18% | ||
| GM | 43.38% |
OM growth 3Y-0.53%
OM growth 5Y0.96%
PM growth 3Y-16.82%
PM growth 5Y-7.58%
GM growth 3Y-0.04%
GM growth 5Y0.44%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so STE is still creating some value.
STE has about the same amout of shares outstanding than it did 1 year ago.
STE has more shares outstanding than it did 5 years ago.
The debt/assets ratio for STE is higher compared to a year ago.
2.2 Solvency
The Debt to FCF ratio of STE is 2.88, which is a good value as it means it would take STE, 2.88 years of fcf income to pay off all of its debts.
STE has a Debt to FCF ratio of 2.88. This is amongst the best in the industry. STE outperforms 87.96% of its industry peers.
STE has a Debt/Equity ratio of 0.32. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.32, STE is in line with its industry, outperforming 50.26% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.32 | ||
| Debt/FCF | 2.88 | ||
| Altman-Z | N/A |
ROIC/WACC1.08
WACC7.14%
2.3 Liquidity
A Current Ratio of 2.13 indicates that STE has no problem at all paying its short term obligations.
STE's Current ratio of 2.13 is on the low side compared to the rest of the industry. STE is outperformed by 61.26% of its industry peers.
STE has a Quick Ratio of 1.40. This is a normal value and indicates that STE is financially healthy and should not expect problems in meeting its short term obligations.
STE has a Quick ratio of 1.40. This is in the lower half of the industry: STE underperforms 63.87% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.13 | ||
| Quick Ratio | 1.4 |
3. Growth
3.1 Past
STE shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.37%.
The Earnings Per Share has been growing by 12.55% on average over the past years. This is quite good.
The Revenue has decreased by -5.77% in the past year.
Measured over the past years, STE shows a quite strong growth in Revenue. The Revenue has been growing by 13.06% on average per year.
EPS 1Y (TTM)7.37%
EPS 3Y12.81%
EPS 5Y12.55%
EPS Q2Q%4.5%
Revenue 1Y (TTM)-5.77%
Revenue growth 3Y18.25%
Revenue growth 5Y13.06%
Sales Q2Q%-1.8%
3.2 Future
STE is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.04% yearly.
STE is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 5.04% yearly.
EPS Next Y3.55%
EPS Next 2Y6.26%
EPS Next 3Y7.32%
EPS Next 5Y5.04%
Revenue Next Year0.05%
Revenue Next 2Y3.13%
Revenue Next 3Y4.14%
Revenue Next 5Y5.04%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 24.51, STE is valued on the expensive side.
Based on the Price/Earnings ratio, STE is valued a bit cheaper than 78.53% of the companies in the same industry.
STE's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 28.79.
With a Price/Forward Earnings ratio of 22.57, STE is valued on the expensive side.
78.01% of the companies in the same industry are more expensive than STE, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of STE to the average of the S&P500 Index (21.38), we can say STE is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.51 | ||
| Fwd PE | 22.57 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of STE indicates a somewhat cheap valuation: STE is cheaper than 79.06% of the companies listed in the same industry.
STE's Price/Free Cash Flow ratio is rather cheap when compared to the industry. STE is cheaper than 81.15% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 29.42 | ||
| EV/EBITDA | 15.91 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of STE may justify a higher PE ratio.
PEG (NY)6.91
PEG (5Y)1.95
EPS Next 2Y6.26%
EPS Next 3Y7.32%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 1.01%, STE has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 1.87, STE pays a better dividend. On top of this STE pays more dividend than 93.72% of the companies listed in the same industry.
With a Dividend Yield of 1.01, STE pays less dividend than the S&P500 average, which is at 2.47.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.01% |
5.2 History
The dividend of STE is nicely growing with an annual growth rate of 8.90%!
STE has been paying a dividend for at least 10 years, so it has a reliable track record.
STE has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)8.9%
Div Incr Years19
Div Non Decr Years19
5.3 Sustainability
STE pays out 46.04% of its income as dividend. This is a bit on the high side, but may be sustainable.
STE's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP46.04%
EPS Next 2Y6.26%
EPS Next 3Y7.32%
225
-1.35 (-0.6%)
Chartmill FA Rating
GICS SectorHealth Care
GICS IndustryGroupHealth Care Equipment & Services
GICS IndustryHealth Care Equipment & Supplies
Earnings (Last)
Earnings (Next)
Inst Owners95.37%
Inst Owner Change0.36%
Ins Owners0.21%
Ins Owner Change-0.3%
Market Cap22.11B
Analysts76.36
Price Target257.9 (14.62%)
Short Float %1.08%
Short Ratio1.89
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.01% |
Yearly Dividend2.03
Dividend Growth(5Y)8.9%
DP46.04%
Div Incr Years19
Div Non Decr Years19
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.64%
Min EPS beat(2)-1.06%
Max EPS beat(2)-0.22%
EPS beat(4)2
Avg EPS beat(4)3.65%
Min EPS beat(4)-1.06%
Max EPS beat(4)8.7%
EPS beat(8)6
Avg EPS beat(8)3.53%
EPS beat(12)6
Avg EPS beat(12)1.4%
EPS beat(16)9
Avg EPS beat(16)2.49%
Revenue beat(2)0
Avg Revenue beat(2)-1.47%
Min Revenue beat(2)-1.82%
Max Revenue beat(2)-1.12%
Revenue beat(4)0
Avg Revenue beat(4)-0.94%
Min Revenue beat(4)-1.82%
Max Revenue beat(4)-0.39%
Revenue beat(8)4
Avg Revenue beat(8)1.76%
Revenue beat(12)5
Avg Revenue beat(12)0.02%
Revenue beat(16)8
Avg Revenue beat(16)0.5%
PT rev (1m)0.19%
PT rev (3m)0.52%
EPS NQ rev (1m)-0.19%
EPS NQ rev (3m)-1.17%
EPS NY rev (1m)-0.11%
EPS NY rev (3m)-0.16%
Revenue NQ rev (1m)-0.47%
Revenue NQ rev (3m)-1.98%
Revenue NY rev (1m)-0.09%
Revenue NY rev (3m)-0.78%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.51 | ||
| Fwd PE | 22.57 | ||
| P/S | 4.34 | ||
| P/FCF | 29.42 | ||
| P/OCF | 19.36 | ||
| P/B | 3.44 | ||
| P/tB | 47.92 | ||
| EV/EBITDA | 15.91 |
EPS(TTM)9.18
EY4.08%
EPS(NY)9.97
Fwd EY4.43%
FCF(TTM)7.65
FCFY3.4%
OCF(TTM)11.62
OCFY5.17%
SpS51.86
BVpS65.43
TBVpS4.7
PEG (NY)6.91
PEG (5Y)1.95
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.67% | ||
| ROE | 7.27% | ||
| ROCE | 10.52% | ||
| ROIC | 7.68% | ||
| ROICexc | 7.81% | ||
| ROICexgc | 23.37% | ||
| OM | 18.82% | ||
| PM (TTM) | 9.18% | ||
| GM | 43.38% | ||
| FCFM | 14.75% |
ROA(3y)2.18%
ROA(5y)4.02%
ROE(3y)3.83%
ROE(5y)6.74%
ROIC(3y)5.03%
ROIC(5y)5.94%
ROICexc(3y)5.15%
ROICexc(5y)6.17%
ROICexgc(3y)16.59%
ROICexgc(5y)18.89%
ROCE(3y)6.89%
ROCE(5y)8.13%
ROICexcg growth 3Y-6.92%
ROICexcg growth 5Y-5.42%
ROICexc growth 3Y-1.81%
ROICexc growth 5Y-3.06%
OM growth 3Y-0.53%
OM growth 5Y0.96%
PM growth 3Y-16.82%
PM growth 5Y-7.58%
GM growth 3Y-0.04%
GM growth 5Y0.44%
F-Score6
Asset Turnover0.51
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.32 | ||
| Debt/FCF | 2.88 | ||
| Debt/EBITDA | 1.34 | ||
| Cap/Depr | 69.12% | ||
| Cap/Sales | 7.67% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 74.93% | ||
| Profit Quality | 160.7% | ||
| Current Ratio | 2.13 | ||
| Quick Ratio | 1.4 | ||
| Altman-Z | N/A |
F-Score6
WACC7.14%
ROIC/WACC1.08
Cap/Depr(3y)60.41%
Cap/Depr(5y)79.83%
Cap/Sales(3y)6.86%
Cap/Sales(5y)7.07%
Profit Quality(3y)231.32%
Profit Quality(5y)179.91%
High Growth Momentum
Growth
EPS 1Y (TTM)7.37%
EPS 3Y12.81%
EPS 5Y12.55%
EPS Q2Q%4.5%
EPS Next Y3.55%
EPS Next 2Y6.26%
EPS Next 3Y7.32%
EPS Next 5Y5.04%
Revenue 1Y (TTM)-5.77%
Revenue growth 3Y18.25%
Revenue growth 5Y13.06%
Sales Q2Q%-1.8%
Revenue Next Year0.05%
Revenue Next 2Y3.13%
Revenue Next 3Y4.14%
Revenue Next 5Y5.04%
EBIT growth 1Y13.24%
EBIT growth 3Y17.62%
EBIT growth 5Y14.14%
EBIT Next Year26.56%
EBIT Next 3Y11.73%
EBIT Next 5Y11.67%
FCF growth 1Y115.18%
FCF growth 3Y10.83%
FCF growth 5Y11.87%
OCF growth 1Y60.23%
OCF growth 3Y12.17%
OCF growth 5Y12.52%