Should Steris Stock Holders Look At Medtronic Instead?
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Steris (STE) and Medtronic (MDT) both earn from hospital procedures. Steris supplies the consumables and service that keep instruments such as endoscopes sterile, and Medtronic provides devices such as its cardiac ablation platforms. Steris stock trades at 27.7 times earnings, against 23.2 for Medtronic. A lower price for faster growth is the case for a Steris holder to look at Medtronic. Is Medtronic’s faster growth a one-off?
Medtronic’s Sales Growth Has Risen Two Years Running
That faster pace covers one twelve-month period so far, although Medtronic’s latest quarter was faster still. In fiscal Q1 2027, Medtronic grew sales 13.7%, compared with 7.3% for Steris in its own fiscal Q1 2027. Medtronic posted 9.8% sales growth over its latest twelve months, against 8.4% for Steris, and Medtronic’s twelve-month growth has beaten the prior year in each of the last two years. In a September 1 release, management then raised Medtronic’s fiscal 2027 forecast for organic revenue growth to 7.5% at the midpoint, from 7.0%. That forecast counted the diabetes business through fiscal year-end, but Medtronic completed the separation of that business, MiniMed, on October 15. Organic growth is a different measure from the reported sales growth above.
Steris delivered a different kind of news on August 5. The company kept its fiscal 2027 sales and earnings forecasts unchanged and announced a new North Carolina plant for its formulated chemistries business, because existing sites will run up against the limits of their capacity, management said. So Medtronic told the market its year would be faster than it had forecast, while Steris outlined spending to meet what management called increasing demand.
What Does Steris’s Higher Price Buy?
It mostly buys a lighter balance sheet. Steris’s debt equals 9.2% of its market value, against 23.2% for Medtronic. That debt figure comes from Steris’s June 30 balance sheet, before Steris agreed to buy Xodus Medical for $2.1 billion, according to October 12 news reports.
Steris is also paying for its own growth. Because of the plant, management raised Steris’s fiscal 2027 capital spending forecast and lowered its free cash flow forecast to $800 million, from $850 million. Management said most of the plant’s cost comes later, in fiscal 2028 and 2029.
Where Does Steris Still Beat Medtronic?
Steris holds the better three-year growth record. Across its last three twelve-month periods, Steris grew sales 9.8% a year on average. This compares with 6.0% for Medtronic, whose fast year followed two slower ones.
On profit, the two companies are level. Steris posted an 18.9% operating margin over its latest twelve months, against Medtronic’s 19.0% over its own latest twelve-month period.
Steris’s higher P/E comes with its faster three-year growth, not with a margin edge. If Medtronic’s growth slips back toward its three-year average, a Steris holder who switched would have traded lighter debt and a faster three-year record solely for a lower multiple.
Which Company Comes Out Ahead?
Medtronic comes out ahead on more measures: its lower P/E, its faster recent growth and its forecasts. Management raised both of Medtronic’s main forecasts, for organic revenue growth and non-GAAP earnings per share. Meanwhile, Steris kept its sales and earnings forecasts, raised its capital spending forecast and lowered its free cash flow forecast. Steris is ahead on debt and on growth across three years, and the two earn about the same operating margin.
Medtronic’s faster growth holds on a year of results, a fast quarter and a raised forecast. Steris’s lighter balance sheet holds as of June, before the Xodus deal. Of those two, Medtronic’s growth is less proven, because its fast pace covers one twelve-month period. Medtronic’s organic revenue growth, against its raised forecast for fiscal 2027, is the number to watch when the company reports, expected in November 2026.
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