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Steris (STE) Hits Fresh High: Is There Still Room to Run?
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Shares of STERIS plc (STE - Free Report) have been strong performers lately, with the stock up 13.7% over the past month. The stock hit a new 52-week high of $186.02 in the previous session. STERIS plc has gained 21.6% since the start of the year compared to the 0.8% move for the Zacks Medical sector and the 17.4% return for the Zacks Medical - Instruments industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 3, 2020, Steris reported EPS of $1.31 versus consensus estimate of $0.97 while it beat the consensus revenue estimate by 4.55%.
For the current fiscal year, Steris is expected to post earnings of $5.64 per share on $2.98 billion in revenues. This represents a 0% change in EPS on a -1.55% change in revenues. For the next fiscal year, the company is expected to earn $6.43 per share on $3.19 billion in revenues. This represents a year-over-year change of 13.87% and 6.9%, respectively.
Valuation Metrics
Steris may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Steris has a Value Score of D. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 32.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 23.1X versus its peer group's average of 23.2X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Steris currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Steris fits the bill. Thus, it seems as though Steris shares could have potential in the weeks and months to come.
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Steris (STE) Hits Fresh High: Is There Still Room to Run?
Shares of STERIS plc (STE - Free Report) have been strong performers lately, with the stock up 13.7% over the past month. The stock hit a new 52-week high of $186.02 in the previous session. STERIS plc has gained 21.6% since the start of the year compared to the 0.8% move for the Zacks Medical sector and the 17.4% return for the Zacks Medical - Instruments industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 3, 2020, Steris reported EPS of $1.31 versus consensus estimate of $0.97 while it beat the consensus revenue estimate by 4.55%.
For the current fiscal year, Steris is expected to post earnings of $5.64 per share on $2.98 billion in revenues. This represents a 0% change in EPS on a -1.55% change in revenues. For the next fiscal year, the company is expected to earn $6.43 per share on $3.19 billion in revenues. This represents a year-over-year change of 13.87% and 6.9%, respectively.
Valuation Metrics
Steris may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Steris has a Value Score of D. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 32.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 23.1X versus its peer group's average of 23.2X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Steris currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Steris fits the bill. Thus, it seems as though Steris shares could have potential in the weeks and months to come.