US Equities Analysis

STE — Steris

Research evidence pack

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 20.04%
Profit Margins 13.18%
Return on Equity 11.37%
Return on Assets 6.65%
Free Float 0.1B
Dividend Yield 1.20%
Short Int % Utilisation 2.11%

2.2 Growth

Metric Value
Revenue Growth 7.3%
Free Cash Flow 0.84B
EBITDA 13.75 (Ratio)
Enterprise Value 21.97B
EV/Revenue 3.7
EV/EBITDA 13.75

Revenue growth of 7.3% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* -1.13%
Risk / Std Dev (Ann.)* 25.39%
1-Year Price Return* -4.23%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $233.28
52-Week Range $195.14 – $269.44
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $5.94B
Prior annual revenue $5.46B
EBIT $1.11B
Tax rate 25.04%
NOPAT = EBIT × (1 − tax rate) $830.60M
Forecast start-growth basis 8.73%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $830.60M
Add: depreciation & amortisation $486.50M
Less: capital expenditure -$369.00M
Less/(add): working-capital cash-flow movement $27.10M
Current unlevered FCFF $975.20M

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 8.73% $903.08M $528.95M -$401.20M $29.46M $1.06B $1.02B
2 7.17% $967.83M $566.88M -$464.19M $31.58M $1.10B $967.13M
3 5.61% $1.02B $598.69M -$526.40M $33.35M $1.13B $907.15M
4 4.06% $1.06B $622.98M -$585.37M $34.70M $1.14B $837.49M
5 2.50% $1.09B $638.56M -$638.56M $35.57M $1.13B $760.78M

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 0.91
Cost of equity 9.74%
Pre-tax cost of debt 2.83%
WACC 9.10%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $17.49B
Implied terminal EV / EBITDA 8.36x
Terminal value as % of enterprise value 71.60%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $4.49B
Present value of terminal value $11.31B
Indicated enterprise value $15.80B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $15.80B
Less: gross interest-bearing debt $2.09B
Add: cash and equivalents $439.60M
Add: affiliate investments $0.00
Less: minority interests $13.60M
Indicated common equity value $14.14B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 98,700,000.00
Share-count basis reported diluted weighted-average shares
Current market price $233.42
DCF indicative value per share $143.26
Indicative value vs. market price -38.63%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 4/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:49:19.028046 UTC; latest reported fiscal period: 2026-03-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha -28.95% -17.83%
Adjusted R² 0.16 0.23
Annualised residual volatility 22.07% 21.08%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 0.52 (4.01) 0.83 (5.83)
Size (SMB) 0.61 (3.49) 0.61 (3.39)
Value (HML) 0.17 (1.15) -0.15 (-0.86)
Profitability (RMW) NM 0.53 (3.48)
Investment (CMA) NM 0.53 (2.01)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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