Medical equipment and services company Steris (NYSE: STE). beat Wall Street’s revenue expectations in Q4 CY2025, with sales up 9.2% year on year to $1.50 billion. Its non-GAAP profit of $2.53 per share was in line with analysts’ consensus estimates.
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STERIS (STE) Q4 CY2025 Highlights:
- Revenue: $1.50 billion vs analyst estimates of $1.48 billion (9.2% year-on-year growth, 1% beat)
- Adjusted EPS: $2.53 vs analyst estimates of $2.53 (in line)
- Management reiterated its full-year Adjusted EPS guidance of $10.23 at the midpoint
- Operating Margin: 18.3%, in line with the same quarter last year
- Free Cash Flow Margin: 0%, down from 17.8% in the same quarter last year
- Constant Currency Revenue rose 7.8% year on year (6.2% in the same quarter last year)
- Market Capitalization: $25.68 billion
Company Overview
With a mission critical role in preventing healthcare-associated infections, STERIS (NYSE: STE) provides infection prevention products, sterilization services, and medical equipment that help healthcare facilities and life science companies maintain sterile environments.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, STERIS grew its sales at a solid 13.8% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. STERIS’s annualized revenue growth of 8% over the last two years is below its five-year trend, but we still think the results were respectable. 
STERIS also reports sales performance excluding currency movements, which are outside the company’s control and not indicative of demand. Over the last two years, its constant currency sales averaged 7% year-on-year growth. Because this number aligns with its normal revenue growth, we can see that STERIS has properly hedged its foreign currency exposure. 
This quarter, STERIS reported year-on-year revenue growth of 9.2%, and its $1.50 billion of revenue exceeded Wall Street’s estimates by 1%.
Looking ahead, sell-side analysts expect revenue to grow 6.3% over the next 12 months, a slight deceleration versus the last two years. Despite the slowdown, this projection is above the sector average and indicates the market is baking in some success for its newer products and services.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
STERIS has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 13.4%, higher than the broader healthcare sector.
Analyzing the trend in its profitability, STERIS’s operating margin rose by 5.9 percentage points over the last five years, as its sales growth gave it operating leverage.
In Q4, STERIS generated an operating margin profit margin of 18.3%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
STERIS’s EPS grew at a remarkable 10.3% compounded annual growth rate over the last five years. Despite its operating margin improvement during that time, this performance was lower than its 13.8% annualized revenue growth, telling us that non-fundamental factors such as interest and taxes affected its ultimate earnings.
Diving into the nuances of STERIS’s earnings can give us a better understanding of its performance. A five-year view shows STERIS has diluted its shareholders, growing its share count by 14.6%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals. 
In Q4, STERIS reported adjusted EPS of $2.53, up from $2.32 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects STERIS’s full-year EPS of $10.08 to grow 8.3%.
Key Takeaways from STERIS’s Q4 Results
It was good to see STERIS narrowly top analysts’ constant currency revenue expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. Investors were likely hoping for more, and shares traded down 4.4% to $252.67 immediately after reporting.
Is STERIS an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
