STERIS (STE) has put fresh numbers on the table for FY 2026, with Q4 revenue of US$1.6 billion and basic EPS of US$2.25, framed against trailing 12 month revenue of US$5.9 billion and EPS of US$7.97, alongside earnings growth of 28.2% over the past year and a five year annualized earnings growth rate of 21.6%. Over recent periods, quarterly revenue has ranged from US$1.4 billion to US$1.6 billion while basic EPS has moved between US$1.80 and US$2.25, and investors now have a clearer view of how that earnings profile sits with a trailing net profit margin of 13.2% compared with 11.2% last year. Taken together, these results point to a business where profitability and margins sit firmly at the center of the current earnings story.

See our full analysis for STERIS.

With the headline figures in place, the next step is to see how these results line up against the widely shared narratives around STERIS's growth, risks, and long term earnings power.

28.2% earnings growth backed by steady quarterly trend

• Across FY 2026, basic EPS moved from US$1.80 in Q1 to US$2.25 in Q4, while quarterly net income excluding extra items ranged between US$177.4 million and US$220.3 million, which sits behind the 28.2% earnings growth figure for the year.
• Consensus narrative points to higher recurring consumables and services as a key support for long term earnings, and the FY 2026 pattern of quarterly net income around the US$180 million to US$220 million range raises a couple of useful checks for that bullish view:
  • With trailing 12 month net income at US$782.3 million and a 13.2% net margin versus 11.2% last year, the data aligns with the idea that higher margin consumables and services are playing a larger role in the profit mix.
  • At the same time, the consensus assumes revenue growth of about 6.4% a year and margin expansion to 14.4%, so investors may want to see whether the current 13.2% margin and US$5.9b of trailing revenue leave enough room for that margin step up without relying too heavily on further mix shift.

Analysts are effectively betting that the current earnings base and margin profile can be a platform for steadier growth rather than a one off spike, and that is the core of the story you are weighing against the current share price.

13.2% net margin meets capital and regulatory pressures

• The trailing 12 month net margin of 13.2% on about US$5.9b of revenue sits above last year's 11.2%, which means roughly US$782.3 million of net income is being earned after expenses and taxes.
• Bears highlight tariff hikes on metals, healthcare reimbursement pressure, and higher regulatory compliance costs as threats to margins, and the current margin level gives you some numbers to test that cautious view against:
  • Consensus expects margins to move from 12.2% to 14.4% over three years, while the trailing margin is already 13.2%, so any squeeze from tariffs or healthcare payment changes would eat into that planned improvement and could make the higher margin target harder to reach.
  • Regulation around areas like infection control and ethylene oxide is flagged as a cost risk, yet the move from 11.2% to 13.2% on the figures provided suggests STERIS has so far absorbed or passed on higher compliance and input costs, something bears will be watching closely if those pressures increase.

Bears are essentially asking whether a 13.2% margin is closer to a high point than a starting point, so the next few reporting periods will be important for seeing how much room there is for further margin expansion while these cost pressures are present.

P/E premium versus 26.4x and DCF fair value gap

• The stock trades at a 26.4x P/E and a share price of US$210.85, which sits below a DCF fair value estimate of about US$312.89 and an analyst price target reference of US$275.00, while both the peer P/E average of 20.2x and the US Medical Equipment industry average of 23.4x are lower.
• Consensus narrative suggests STERIS earns this premium because of recurring revenue, secular demand and an earnings path that analysts expect to reach about US$1.0b by 2029, and the current numbers give a few pressure points for that thesis:
  • With trailing net income at roughly US$782.3 million and earnings expected to grow around 8.65% a year, the gap between today and that US$1.0b earnings figure is meaningful, so the 26.4x P/E multiple is being asked to stretch across several years of progress rather than a single catalyst.
  • Earnings and revenue growth forecasts of about 8.65% and 6% a year are below the cited US market averages of 16.7% and 11.6%, so the market is currently assigning a higher than peer P/E multiple to a company that is expected to grow more slowly than the wider market, which is where valuation debates around the DCF fair value of US$312.89 and the US$275.00 analyst target tend to focus.

For you as an investor, the key question is whether the combination of 28.2% trailing earnings growth, a 13.2% net margin and a P/E of 26.4x justifies the gap between the current US$210.85 share price and the higher values indicated by intrinsic models and analyst targets.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for STERIS on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

If this mix of earnings growth, margins, and valuation has you weighing both the upside and the risks, it makes sense to check the underlying details yourself and not rely on any single view. To see exactly which factors support the more optimistic case around STERIS, take a closer look at the 4 key rewards.

See What Else Is Out There

STERIS carries a P/E of 26.4x despite earnings and revenue growth forecasts that sit below the broader US market, which raises questions about paying a premium for slower growth.

If that mismatch between growth expectations and valuation makes you cautious, it is worth checking companies trading at more modest earnings multiples using the 44 high quality undervalued stocks.

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.