steris stock analysis

Steris Stock Analysis -NASDAQ STE – A good business but overvalued

Steris stock analysis is part of a full Waste Management stocks sector investing analysis alongside a list of 15 waste management stocks, all analyzed.

Steris stock analysis

Steris Plc operates as a provider of infection prevention and other procedural products and services. The Company offers sterilizers and washers, surgical tables, lights and equipment management systems, and endoscopy accessories.

Steris stock analysis - Steris Plc Business – Source: Steris Investor Relations
Steris stock analysis – Steris Plc Business – Source: Steris Investor Relations

It is not a pure waste management business, but it can be included in a waste management ETF as it is the case with this list.

It is an interesting business because 75% of revenue is recurring as you have to sterilize the equipment the company sold to you.

Steris Plc Business – Source: Steris Investor Relations
Steris Plc Business – Source: Steris Investor Relations

Steris stock analysis – Steris stock price

Healthcare is definitively a growing business with expected growth rates around 5%. Their revenues should grow in line even if that hasn’t been the case over the last years. However, a price to earnings ratio in the high 30s, makes this another good business that is overvalued.

Steris stock price chart

If the company grows earnings at 5% per year, it will take a long time before there is a significant return to shareholders in the form of higher dividends and lower valuations. Perhaps we are in a similar situation to the 1990s. It took the stock more than 20 years to return to previous highs. Given the exuberance surrounding the sector, it is likely to be the case again.

Steris stock price chart - long-term
Steris stock price chart – long-term

What is interesting about Steris is that before 2013, it was on nobody’s radar. The market cap was below $2 billion, before the merger with Synergy Health in 2015 and the stock didn’t do much since 1999. However, revenues were growing, the dividend had been increased and all was looking better.

Steris Plc Financials – Source: Morningstar
Steris Plc Financials – Source: Morningstar

So, this is another indication of what to look for. Plus, in 2012 the price to earnings ratio was around 14, not bad for a stock that doubled revenues and earnings going forward.

Sven Carlin Ph.D., the author, is an independent stock market researcher and investor managing the Sven Carlin Stock Market Research Platform.

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