STERIS (STE): Evaluating Valuation After Recent Share Price Surge

STERIS (STE) has caught the attention of investors after its shares climbed nearly 13% over the past month. With ongoing demand for infection prevention solutions, recent trading activity points to renewed market interest in the company’s steady revenue growth and expanding healthcare footprint.

See our latest analysis for STERIS.

Zooming out, STERIS has notched an impressive 31.5% share price return so far this year, with its momentum especially strong over the last month. While the total shareholder return comes in at 22.8% over the past year, investors are clearly responding to a sustained track record of growth and recent optimism around the healthcare sector.

Curious what else is trending in healthcare? Now is a smart time to check out See the full list for free.

Given this surge, investors face a crucial question: Is STERIS currently trading below its true value, or has the recent outperformance already priced in all of its promising future growth?

Most Popular Narrative: 5.4% Undervalued

With STERIS trading at $266.28, and the most widely followed narrative pointing to a fair value of $281.63, there is a notable gap between the current price and forecasted potential. This difference reflects positive expectations for future growth and stable earnings. It also sets a high bar for operational execution ahead.

Continued expansion of STERIS's consumables and services segments, with high recurring revenue and margin visibility, positions the company to benefit from increasing healthcare expenditures and adoption of best-practice infection control standards. This supports both revenue and margin expansion.

Read the complete narrative.

Want to know the formula the narrative uses to reach this fair value? One surprising growth driver stands out alongside ambitious profit projections. See what hidden tailwinds could justify paying a premium for this healthcare leader.

Result: Fair Value of $281.63 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, higher tariffs and shifting healthcare payment models could put pressure on STERIS's margins and growth, posing risks to the current optimistic outlook.

Find out about the key risks to this STERIS narrative.

Another View: Is Growth Already Priced In?

While the fair value model suggests STERIS is undervalued, a look at its price-to-earnings ratio paints a different picture. At 37.9x, STERIS trades much higher than peers at 25.2x and the industry average of 28.9x, and well above its fair ratio of 26x. This premium signals investors might already be paying up for much of the anticipated growth. So is there really room for more upside?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own STERIS Narrative

If you want to dig deeper, challenge the consensus, or add your own perspective, you can craft your own personalized outlook for STERIS in just a few minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding STERIS.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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