Sotera Health Co (NASDAQ: SHC)

Sector: Healthcare Industry: Diagnostics & Research CIK: 0001822479
Market Cap 5.32 Bn
P/B 9.67
P/E 96.00
P/S 4.63
ROIC (Qtr) 8.02
Div Yield % 0.00
Rev 1y % (Qtr) 9.05
Total Debt (Qtr) 2.28 Bn
Debt/Equity (Qtr) 4.14

About

Price action

Investment thesis

Bull case

  • Healthy cash reserves of 301.03M provide 13.15x coverage of short-term debt 22.90M, demonstrating strong liquidity position and minimal refinancing risk.
  • Tangible assets of 1.80B provide exceptional 57.96x coverage of deferred revenue 30.99M, showing strong service capability backing.
  • Operating cash flow of 239.81M provides strong 7.74x coverage of deferred revenue 30.99M, indicating service delivery capability.
  • Operating cash flow of 239.81M fully covers other non-current liabilities 107.82M by 2.22x, showing strong long-term stability.
  • Operating cash flow of 239.81M provides solid 0.99x coverage of current liabilities 242.40M, showing strong operational health.

Bear case

  • Operating cash flow of 239.81M barely covers its investment activities of (150.31M), with a coverage ratio of -1.60, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • High receivables of 142.39M relative to inventory of 49.87M (2.86 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating earnings of 283.61M show weak coverage of depreciation charges of 144.49M, with a 1.96 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 144.49M relative to operating cash flow of 239.81M, which is 0.60x suggests significant maintenance capital requirements affecting free cash flow.
  • Free cash flow of 86.62M represents just -0.96x of debt issuance (90.26M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Geographical Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Diagnostics & Research
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TMO Thermo Fisher Scientific Inc. 234.48 Bn 35.69 5.36 35.68 Bn
2 DHR Danaher Corp /De/ 171.11 Bn 48.85 7.05 16.86 Bn
3 IDXX Idexx Laboratories Inc /De 57.62 Bn 56.08 13.83 1.09 Bn
4 IQV Iqvia Holdings Inc. 42.37 Bn 33.03 2.66 15.19 Bn
5 A Agilent Technologies, Inc. 42.16 Bn 32.36 6.07 3.35 Bn
6 NTRA Natera, Inc. 31.64 Bn -102.32 14.95 0.18 Bn
7 MTD Mettler Toledo International Inc/ 30.89 Bn 36.96 7.84 2.21 Bn
8 WAT Waters Corp /De/ 23.59 Bn 36.37 7.60 1.49 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.30 2.82
EV to Cash from Ops. EV/CFO 30.59 19.55
EV to Debt EV to Debt 3.22 54.87
EV to EBIT EV/EBIT 25.87 18.82
EV to EBITDA EV/EBITDA 15.02 4.36
EV to Free Cash Flow [EV/FCF] EV/FCF 84.70 17.63
EV to Market Cap EV to Market Cap 1.38 1.58
EV to Revenue EV/Rev 6.38 5.06
Price to Book Value [P/B] P/B 9.67 1.35
Price to Earnings [P/E] P/E 96.00 18.88
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -2.00
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.86
Dividend per Basic Share Div per Share (Qtr) 0.00 0.19
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.94
Interest Coverage Int. cover (Qtr) 1.75 -128.90
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 13.95 -35.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -2.42 23.84
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.25
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -18.56 9.72
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 2.03 -444.66
EBIT Growth (1y) % EBIT 1y % (Qtr) -5.77 8.29
EBT Growth (1y) % EBT 1y % (Qtr) -9.37 -6.03
EPS Growth (1y) % EPS 1y % (Qtr) -20.00 15.59
FCF Growth (1y) % FCF 1y % (Qtr) -16.35 56.57
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.20 185.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.36 0.57
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 1.24 1.23
Current Ratio Curr Ratio (Qtr) 2.38 2.70
Debt to Equity Ratio Debt/Equity (Qtr) 4.14 -0.84
Interest Cover Ratio Int Coverage (Qtr) 1.75 -128.90
Times Interest Earned Times Interest Earned (Qtr) 1.75 -128.90
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 37.20 -97.22
EBIT Margin % EBIT Margin % (Qtr) 24.65 -115.64
EBT Margin % EBT Margin % (Qtr) 10.60 -114.24
Gross Margin % Gross Margin % (Qtr) 56.00 44.76
Net Profit Margin % Net Margin % (Qtr) 4.80 -113.12