STE – Market expectations are for Uniform ROA to expand, but management may have concerns about their Cantel acquisition, backlog, and growth
March 30, 2022
- STERIS plc (STE) currently trades above corporate and historical averages relative to Uniform earnings, with a 47.9x Uniform P/E (Fwd. V/E’).
At these levels, markets are pricing in expectations for Uniform ROA to expand to 31% in 2026, accompanied by 5% Uniform asset growth.
However, analysts expect Uniform ROA to decline to 17% by 2023, accompanied by 16% Uniform asset growth.
If sustained going forward, these levels would imply a stock price closer to $178, representing approximately 23% equity downside for the firm.
Moreover, the firm’s most recent earnings call suggests management may have concerns about their Cantel acquisition, backlog, and growth.
