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Thanks to smart moves, Steris stock on rise By CHUCK SODER csoder@crain.com
Forget about the problems Steris Corp. has had with federal regulators. Investors certainly have. The medical equipment company’s stock price has spent the past four months crushing its previous records. Last Tuesday, Aug. 26, it closed above $56, an all-time high. Why all the excitement? A few months back, didn’t Steris say that it’s going to close the Mentor facto-
ry where it makes the System 1E sterilization system — its bestknown product? Yes, but while Steris was addressing regulatory problems that caused that line of business to lose market share, it was diversifying the rest of its business and making it more efficient. And the fruits of those efforts are starting to show up in the company’s quarterly reports — if you know where to look. Lately, the line item that says how much profit Steris is generat-
ing has been OK, but not amazing. But Steris has been buying companies and restructuring its business — activities that generate big, one-time costs. If you exclude those costs, the picture looks much brighter: Steris’ adjusted earnings hit an all-time high — $147.9 million — during its 2014 fiscal year, which ended on March 31. That equates to $2.48 per share, which easily beats adjusted earnings from past years. And that figure should go up by a lot in fiscal 2015. On average, stock analysts say
Steris’ adjusted earnings should hit $2.86, according to Thomson Reuters. That’s on the high end of guidance provided by Steris. Granted, those earnings will have to keep going up to justify a $56 stock price, but Matt Mishan expects they will. Mishan, an analyst at KeyBanc Capital Markets in New York, expects Steris’ adjusted earnings per share to hit $3.24 in fiscal 2016, which ends on March 31 of that year. Why? He said Steris has made
some smart acquisitions that have helped the company diversify after the U.S. Food & Drug Administration forced it to replace its original System 1 endoscope sterilizer in December 2009, saying the company changed the machine too much since the FDA approved it for sale in the 1980s. And many of those acquisitions are recent: Steris has bought four companies since December for a total of about $230 million. Three of them focus on repairing See STERIS, page 20
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