Medical equipment and services company Steris (NYSE: STE) announced better-than-expected revenue in calendar Q3 2026 (fiscal Q2 2027), with revenue up 8.8% year on year to $1.59 billion. Its non-GAAP profit of $2.94 per share was 9.8% above analysts’ consensus estimates.
For more on STERIS, read our free full research report.
STERIS (STE) Q3 CY2026 highlights:
- Revenue $1.59 billion vs S&P analysts’ consensus estimates of $1.56 billion (8.8% year-on-year growth, 1.7% beat)
- Adjusted EPS $2.94 vs S&P analysts’ consensus estimates of $2.68 (9.8% beat)
- Adjusted EPS guidance Management raised its full-year adjusted EPS guidance to $11.45 at the midpoint, a 2.2% increase
- Operating margin 18.5%, in line with the same quarter last year
- Free cash flow margin 13.4%, similar to the same quarter last year
- Constant currency revenue rose 8.1% year on year, in line with the same quarter last year
- Market capitalization $22.56 billion
Revenue growth
Reviewing a company’s long-term revenue performance reveals insights into its quality. Even a weak business can perform well for one or two quarters, but a high-quality one grows for years. Over the last five years, STERIS grew its revenue at a decent 9.9% compounded annual growth rate. Its growth was slightly above 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 7.6% over the last two years is below its five-year trend, but the results were still respectable. 
Constant currency revenue provides more insight into the company’s revenue dynamics by excluding currency movements that are outside its control and not indicative of demand. Over the last two years, its constant currency revenue averaged 7% year-on-year growth. This was in line with reported revenue growth, indicating that foreign exchange has not had a meaningful impact on revenue. 
This quarter, STERIS reported year-on-year revenue growth of 8.8%, and its $1.59 billion of revenue exceeded Wall Street’s consensus estimates by 1.7%.
Looking ahead, sell-side analysts expect revenue to grow 6.6% over the next 12 months, according to S&P, similar to its two-year rate. This projection is above average for the sector and suggests its newer products and services will help support its recent top-line performance.
Adjusted operating margin
Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company retains after subtracting all core expenses, such as marketing and research and development. It also removes various one-time costs to provide a better picture of normalized profits.
STERIS has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, with an average adjusted operating margin of 23.1%.
Looking at the trend in its profitability, STERIS’s adjusted operating margin decreased by 1.2 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.
This quarter, STERIS generated an adjusted operating margin of 18.5%, down 4.6 percentage points year on year. This contraction shows it was less efficient because its expenses grew faster than its revenue.
Earnings per share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share, or EPS, points to the profitability of that growth. For example, a company could inflate its revenue through excessive spending on advertising and promotions.
STERIS’s solid 8.9% annual EPS growth over the last five years aligns with its revenue performance, indicating it maintained its per-share profitability as it expanded.
In Q3, STERIS reported adjusted EPS of $2.94, up from $2.47 in the same quarter last year. The result beat analysts’ consensus estimates by 9.8%. Over the next 12 months, Wall Street expects STERIS’s full-year EPS to grow 7.7% from $10.89 to $11.73, according to S&P.
Key takeaways from STERIS’s Q3 results
STERIS delivered a solid Q3, with EPS topping Wall Street’s consensus estimates and full-year EPS guidance also coming in ahead of analysts’ expectations. Those were key positives for the quarter. Shares surged 5.2% to $261.32 immediately after the report.
STERIS may have had a good quarter, but does that make it a good investment? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation when deciding whether to invest in this stock. For more on those factors, read our full research report here (it’s free).
