• Wondering if STERIS is offering fair value at today's price, or if the recent pullback has opened a window worth watching.
• The stock closed at US$216.57, with the share price up 2.1% over the last 7 days but down 3.1% over the past month and down 13.4% year to date, leaving the 1 year return at a decline of 10.0% despite a rise of 11.2% over 3 years and 18.6% over 5 years.
• Recent coverage has focused on STERIS as a key player in medical equipment and services, which can influence how investors think about the stock's resilience and long term relevance. This context helps explain why short term price moves may not always line up neatly with longer term performance figures.
• On Simply Wall St's 6 point valuation checklist, STERIS currently scores 1 out of 6. The next sections will walk through what different valuation methods say about the stock, and then finish with a broader framework that can help you judge whether those numbers truly fit your own view of value.

STERIS scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: STERIS Discounted Cash Flow (DCF) Analysis

A DCF model estimates what a stock could be worth by projecting the company’s future cash flows and discounting them back to today’s value. It focuses on the cash the business is expected to generate for shareholders, not just accounting earnings.

For STERIS, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month Free Cash Flow (FCF) is about $946.7 million. Simply Wall St then projects FCF out over the next decade, using analyst estimates where available and extending those further using its own growth assumptions. For example, projected FCF for 2028 is $977.9 million, with ten year projections ranging from about $843.5 million to $1,280.7 million between 2026 and 2035, all in dollar terms.

Discounting these projected cash flows back to today results in an estimated intrinsic value of about $227.49 per share. Compared with the recent share price of $216.57, the DCF suggests the stock is trading at roughly a 4.8% discount, which is a fairly small gap.

Result: ABOUT RIGHT

STERIS is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: STERIS Price vs Earnings

For a profitable company, the P/E ratio is a straightforward way to see how much you are paying for each dollar of earnings. It ties the share price directly to profits, which tend to be more stable than revenue alone and more relevant to you as a shareholder than book value in many cases.

What counts as a “normal” P/E depends on what the market expects for growth and how risky those earnings are perceived to be. Higher expected growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk usually point to a lower one.

STERIS currently trades at about 27.15x earnings. That sits above the Medical Equipment industry average of roughly 24.53x and above the peer average of 21.70x. Simply Wall St’s Fair Ratio, its proprietary estimate of what the P/E “should” be after factoring in earnings growth, profit margins, size, risks and industry, is 23.64x. This Fair Ratio is more tailored than a simple peer or industry comparison because it folds several company specific factors into a single benchmark.

Comparing 27.15x with the Fair Ratio of 23.64x suggests STERIS is trading at a premium to what that framework would consider fair.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your STERIS Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives bring your view of STERIS together by letting you tell a clear story about its future revenue, earnings and margins. You can link that story to a financial forecast, and then compare the fair value that results from your assumptions with today’s share price. All of this is available within an easy tool on Simply Wall St’s Community page that updates automatically when new earnings or news arrive. The tool can show, for example, one investor using the higher analyst fair value of about $300 per share because they see recurring consumables and services as a strong support for future earnings, while another leans closer to the lower $231 figure because they focus more on tariff, reimbursement and M&A risks. This gives you a simple way to see where your own view sits between those end points.

Do you think there's more to the story for STERIS? Head over to our Community to see what others are saying!

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.