Why Steris PLC (NYSE: STE) stock is rising

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Steris PLC (NYSE: STE) stock surged over 4.1% in the pre-market session of 13th May, 2020 (as of  7:48 pm GMT-4; Source: Google finance) as the company posted better than expected earnings for the fourth quarter of FY 20. The company has reported 16% increase in the adjusted net income to $482.6 million compared to adjusted net income of $417.5 million in fiscal 2019. The company has generated net cash provided by operations for fiscal 2020 of $590.6 million, compared to $539.5 million in fiscal 2019.  The company has generated free cash flow for fiscal 2020 of $380.2 million compared to $355.4 million in the prior year. The increase in free cash flow is mainly due to the improvement in cash from operations. The company had experienced modest financial impact due to fall in procedure volumes late in the fourth quarter due to COVID-19.  Because of the uncertainty of COVID-19, the company has not provided guidance for fiscal 2021 at this time.

STE in the fourth quarter of FY 20 has reported the adjusted earnings per share of $1.64, beating the analysts’ estimates for the adjusted earnings per share of $1.57, according to figures compiled by Thomson Reuters. The company had reported the adjusted revenue growth of 7 percent to $823 million in the fourth quarter of FY 20 with growth across all segments and constant currency organic revenue growth of 8% for the fourth quarter of fiscal 2020.

Moreover, Healthcare Products revenue grew 3% in the quarter to $397.8 million, on the back of 10% rise in consumable revenue and 3% rise in service revenue partially offset by a 1% fall in capital equipment revenue. Healthcare Specialty Services revenue rose 10% in the quarter to $148.8 million compared with $135.5 million in the fourth quarter of fiscal 2019 with constant currency organic revenue growth of 11%. The fourth quarter 2020 revenue for Applied Sterilization Technologies rose 14% to $163.7 million compared with $143.1 million in the same period last year with constant currency organic revenue growth of 15%, mainly due to increased volume from the segment’s core medical device Customers. Life Sciences fourth quarter revenue grew 9% to $112.7 million, due to 26% growth in consumable revenue and 5% growth in service revenue partially offset by a 9% decline in capital equipment revenue.

Additionally, the company has declared a quarterly interim dividend of $0.37 per share, which will be payable on June 26, 2020 to shareholders of record at the close of business on June 12, 2020.

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