Home > Comparison > Healthcare > STE vs ALGN
The strategic rivalry between STERIS plc and Align Technology, Inc. defines the current trajectory of the healthcare medical devices sector. STERIS operates as a diversified infection prevention and procedural products provider with a capital-intensive model. Align Technology focuses on innovative clear aligners and intraoral scanners, exemplifying a high-margin, technology-driven approach. This analysis explores their divergent paths to determine which offers superior risk-adjusted returns for a diversified portfolio.
Table of contents
Companies Overview
STERIS plc and Align Technology, Inc. both hold significant roles in the evolving medical devices market.
STERIS plc: Infection Prevention Powerhouse
STERIS plc dominates the infection prevention sector, generating revenue through procedural products and services. Its diversified segments include Healthcare, Applied Sterilization Technologies, Life Sciences, and Dental. In 2026, STERIS focuses strategically on expanding sterile processing solutions and contract sterilization services for healthcare providers and pharmaceutical manufacturers.
Align Technology, Inc.: Digital Orthodontics Innovator
Align Technology leads in clear aligners and digital scanners, primarily earning from Invisalign products and iTero scanners. Its dual-segment approach targets orthodontic and restorative dentistry markets. In 2026, Align sharpens its strategy around digital workflows and expanding its scanner platform’s software capabilities for dental professionals worldwide.
Strategic Collision: Similarities & Divergences
Both companies emphasize innovation in medical devices but diverge in approach: STERIS prioritizes sterilization and procedural equipment, while Align invests heavily in digital orthodontic solutions. Their battleground lies in healthcare providers’ adoption of advanced technologies. STERIS offers a broad industrial moat with diversified services; Align’s growth hinges on proprietary digital platforms, leading to distinct risk and opportunity profiles.
Income Statement Comparison
This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:
| Metric | STERIS plc (STE) | Align Technology, Inc. (ALGN) |
|---|---|---|
| Revenue | 5.46B | 4.03B |
| Cost of Revenue | 3.06B | 1.32B |
| Operating Expenses | 1.54B | 2.13B |
| Gross Profit | 2.40B | 2.71B |
| EBITDA | 1.36B | 546M |
| EBIT | 882M | 0 |
| Interest Expense | 86M | 0 |
| Net Income | 615M | 410M |
| EPS | 6.24 | 5.66 |
| Fiscal Year | 2025 | 2025 |
Income Statement Analysis: The Bottom-Line Duel
This income statement comparison reveals which company converts revenue into profit most efficiently, exposing operational strength and financial discipline.
STERIS plc Analysis
STERIS shows a strong upward trajectory in revenue, hitting $5.46B in 2025, a 6.2% rise from the prior year. Net income surged 62.7% to $615M, reflecting improved margin health. Its gross margin stands at a healthy 44%, and net margin climbed to 11.3%, signaling solid cost control and accelerating profitability momentum.
Align Technology, Inc. Analysis
Align’s revenue grew marginally by 0.9% to $4.03B in 2025, while net income slipped slightly to $410M, down 3.5%. Despite a robust gross margin of 67%, its net margin dipped to 10.2%, highlighting pressure on operating efficiency. The absence of EBIT in 2025 points to challenges in translating gross profit into operating earnings.
Margin Strength vs. Growth Resilience
STERIS outperforms Align with stronger revenue growth and expanding net income margins, demonstrating operational leverage and effective capital allocation. Align, despite higher gross margins, struggles with bottom-line erosion and stagnant revenue. For investors, STERIS’s profile offers a more compelling balance of growth and profitability stability in the current market cycle.
Financial Ratios Comparison
These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of the companies analyzed below:
| Ratios | STERIS plc (STE) | Align Technology, Inc. (ALGN) |
|---|---|---|
| ROE | 9.3% | 10.9% |
| ROIC | 7.2% | 10.0% |
| P/E | 36.3 | 37.1 |
| P/B | 3.38 | 4.05 |
| Current Ratio | 1.96 | 1.22 |
| Quick Ratio | 1.39 | 1.10 |
| D/E | 0.33 | 0.03 |
| Debt-to-Assets | 21.7% | 1.9% |
| Interest Coverage | 10.0 | N/A |
| Asset Turnover | 0.54 | 0.64 |
| Fixed Asset Turnover | 2.58 | 2.89 |
| Payout Ratio | 35.8% | 0% |
| Dividend Yield | 0.98% | 0% |
| Fiscal Year | 2025 | 2024 |
Efficiency & Valuation Duel: The Vital Signs
Financial ratios act as a company’s DNA, exposing hidden risks and operational strengths that define its true market value and efficiency.
STERIS plc
STERIS demonstrates moderate profitability with a 9.31% ROE and a solid 11.26% net margin, indicating decent operational control. Its valuation appears stretched, with a high P/E ratio of 36.35 and a P/B of 3.38. The company returns value to shareholders modestly through a low 0.98% dividend yield, signaling limited income but some stability.
Align Technology, Inc.
Align posts a stronger 10.94% ROE and a 10.54% net margin, reflecting efficient profit generation. However, its valuation also looks expensive with a P/E of 37.05 and P/B at 4.05. It pays no dividends, focusing capital allocation on growth and R&D, which supports long-term value creation but increases risk.
Premium Valuation vs. Operational Safety
STE offers a slightly favorable ratio profile with better liquidity and moderate debt, balancing risk more prudently. ALGN, while operationally efficient, carries a pricier valuation and no dividend cushion. Investors favoring stability might lean toward STE, whereas growth-oriented profiles suit ALGN better.
Which one offers the Superior Shareholder Reward?
I observe that STERIS plc (STE) pays a steady dividend with a yield near 0.98% and a payout ratio around 36%, supported by solid free cash flow coverage above 65%. Its buyback program appears moderate, complementing its shareholder returns sustainably. Align Technology, Inc. (ALGN) does not pay dividends but aggressively reinvests in growth, evidenced by high free cash flow margins and minimal debt. ALGN’s buybacks are less explicit but its capital allocation favors expansion over distributions. Historically, dividend payments with buybacks provide consistent rewards in mature sectors, while reinvestment suits high-growth tech. Given STE’s balanced yield and buyback sustainability, I judge STE as offering a more attractive total shareholder return profile in 2026.
Comparative Score Analysis: The Strategic Profile
The radar chart reveals the fundamental DNA and trade-offs of both STERIS plc and Align Technology, Inc., highlighting their financial strengths and valuation nuances:
STE and ALGN both score well on discounted cash flow and return on assets, signaling strong operational efficiency. However, ALGN’s debt-to-equity score at 4 outperforms STE’s 2, indicating a more conservative capital structure. STE shows weaker valuation scores (PE and PB at 2 each), suggesting potential undervaluation but also possible investor caution. ALGN presents a more balanced profile with solid financial leverage and moderate valuation metrics, while STE relies more on asset efficiency and DCF strength.
Bankruptcy Risk: Solvency Showdown
STE’s Altman Z-Score of 5.93 significantly exceeds ALGN’s 4.56, both safely above the distress threshold. This gap implies STE holds a stronger buffer against financial distress in this cycle:
Financial Health: Quality of Operations
STE’s Piotroski F-Score of 8 demonstrates very strong financial health, edging out ALGN’s 7, which remains strong but slightly less robust. STE’s superior internal metrics suggest fewer red flags and higher operational quality:
How are the two companies positioned?
This section dissects the operational DNA of STE and ALGN by comparing their revenue distribution and internal dynamics, including strengths and weaknesses. The final objective is to confront their economic moats to reveal which model offers the most resilient and sustainable competitive advantage today.
Revenue Segmentation: The Strategic Mix
This visual comparison dissects how STERIS plc and Align Technology, Inc. diversify their income streams and where their primary sector bets lie:
STERIS balances its revenue between Products at $2.87B and Services at $2.59B, showing a well-diversified model. Align Technology pivots heavily on Clear Aligners with $3.23B, dwarfing its $769M Scanners and Services segment. STERIS’s dual focus reduces concentration risk, while Align’s dominance in orthodontics anchors it to innovation in a niche market but increases exposure to sector shifts.
Strengths and Weaknesses Comparison
This table compares the strengths and weaknesses of STERIS plc and Align Technology, Inc.:
STERIS plc Strengths
- Diversified revenue from products and services
- Favorable net margin of 11.26%
- Strong liquidity ratios with current ratio of 1.96
- Moderate debt levels with debt-to-assets at 21.71%
- Solid global presence with significant U.S. and international sales
Align Technology Strengths
- Leading market share in clear aligners with $3.23B revenue
- Favorable quick ratio at 1.1 and low debt-to-assets at 1.92%
- Neutral ROIC of 9.99% indicating efficient capital use
- Expanding international footprint, notably in Switzerland and other markets
STERIS plc Weaknesses
- Unfavorable ROE at 9.31% below WACC of 8.25%
- High P/E at 36.35 and P/B at 3.38 valuations
- Dividend yield low at 0.98%
- Neutral asset turnover indicating moderate operational efficiency
Align Technology Weaknesses
- Unfavorable interest coverage ratio at 0, signaling risk in meeting interest obligations
- High P/E of 37.05 and P/B of 4.05 valuations
- Zero dividend yield
- Current ratio only neutral at 1.22, indicating tight liquidity
Both companies show solid profitability but face valuation challenges with high P/E and P/B ratios. STERIS benefits from stronger liquidity and more balanced revenue streams, while Align’s interest coverage and liquidity warrant cautious monitoring. These factors influence how each firm might allocate capital and strategize growth amid market pressures.
The Moat Duel: Analyzing Competitive Defensibility
A structural moat protects long-term profits from competition’s relentless erosion. Without it, gains quickly vanish into market noise:
STERIS plc: Service Integration Moat
STERIS leverages high switching costs through integrated sterilization and maintenance services. Its stable EBIT margin (16%) and rising ROIC reflect disciplined capital use. Expanding life sciences services in 2026 could deepen this moat.
Align Technology, Inc.: Innovation-Driven Moat
Align’s moat hinges on proprietary Invisalign technology and digital orthodontic scanners. Despite a superior gross margin (67%), declining EBIT and ROIC trends signal pressure. Growth depends on innovation and geographic expansion beyond core U.S. and Swiss markets.
Moat Strength Face-Off: Service Ecosystem vs. Innovation Edge
STERIS holds a wider, more resilient moat with diversified revenue and improving profitability. Align’s innovation moat faces margin compression and declining capital returns. STERIS is better positioned to defend and grow market share in 2026.
Which stock offers better returns?
The past year reveals contrasting price dynamics: STERIS plc advanced steadily with decelerating gains, while Align Technology, Inc. faced a steep decline but showed recent strong recovery momentum.
Trend Comparison
STERIS plc’s stock gained 14.88% over the past 12 months, signaling a bullish trend with decelerating momentum and a high volatility of 16.19%. It peaked at 268.65 and bottomed at 199.51.
Align Technology, Inc. dropped 48.69% over the same period, marking a bearish trend with accelerating losses and elevated volatility of 50.54%. Its price ranged from 327.92 to 125.79.
Comparing both, STERIS plc delivered the highest market performance with positive returns, while Align Technology suffered significant losses despite recent recovery signs.
Target Prices
Analysts present a confident target consensus for both STERIS plc and Align Technology, Inc.
| Company | Target Low | Target High | Consensus |
|---|---|---|---|
| STERIS plc | 245 | 265 | 256.67 |
| Align Technology, Inc. | 140 | 200 | 176.43 |
STERIS plc’s target consensus at 257 slightly trails its current price of 264, suggesting limited upside. Align Technology shows a more substantial gap, with a consensus target 9% above its current 161, indicating stronger growth expectations.
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How do institutions grade them?
Institutional grade data for STERIS plc and Align Technology, Inc. from multiple analysts appear as follows:
STERIS plc Grades
The following table shows recent grades from reputable grading companies for STERIS plc:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Morgan Stanley | maintain | Overweight | 2025-08-08 |
| Keybanc | maintain | Overweight | 2025-07-22 |
| Morgan Stanley | upgrade | Overweight | 2025-07-15 |
| Morgan Stanley | maintain | Equal Weight | 2025-05-19 |
| JMP Securities | maintain | Market Outperform | 2025-05-16 |
| Stephens & Co. | maintain | Overweight | 2025-05-15 |
| Morgan Stanley | maintain | Equal Weight | 2025-05-12 |
| JMP Securities | maintain | Market Outperform | 2025-04-10 |
| Needham | maintain | Hold | 2025-04-07 |
| Stephens & Co. | maintain | Overweight | 2025-02-06 |
Align Technology, Inc. Grades
Recent grades from established grading firms for Align Technology, Inc. are listed below:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Mizuho | maintain | Outperform | 2026-01-20 |
| Piper Sandler | maintain | Overweight | 2025-10-30 |
| Morgan Stanley | maintain | Equal Weight | 2025-10-30 |
| Wells Fargo | maintain | Overweight | 2025-10-30 |
| Evercore ISI Group | maintain | Outperform | 2025-10-30 |
| Morgan Stanley | maintain | Equal Weight | 2025-10-21 |
| UBS | maintain | Neutral | 2025-10-16 |
| Mizuho | maintain | Outperform | 2025-10-13 |
| Jefferies | downgrade | Hold | 2025-10-10 |
| Evercore ISI Group | maintain | Outperform | 2025-10-08 |
Which company has the best grades?
STERIS plc consistently receives “Overweight” and “Market Outperform” grades, with no downgrades. Align Technology, Inc. holds mostly “Outperform” and “Overweight” ratings but experienced a recent downgrade to “Hold” by Jefferies. This suggests STERIS maintains a steadier analyst confidence, which may appeal to investors seeking stability in analyst sentiment.
Risks specific to each company
The following categories identify the critical pressure points and systemic threats facing both firms in the 2026 market environment:
1. Market & Competition
STERIS plc
- Operates in diversified medical sterilization and services with moderate asset turnover, facing intense competition in healthcare equipment.
Align Technology, Inc.
- Focuses on clear aligners and scanners in orthodontics, with higher beta indicating greater market sensitivity and competition.
2. Capital Structure & Debt
STERIS plc
- Maintains moderate leverage (D/E 0.33), strong interest coverage (10.23), and solid liquidity ratios (current 1.96).
Align Technology, Inc.
- Extremely low debt levels (D/E 0.03) but zero interest coverage raises concerns about earnings covering debt.
3. Stock Volatility
STERIS plc
- Beta at 1.044 suggests stock moves close to market average, indicating moderate volatility.
Align Technology, Inc.
- Higher beta of 1.831 signals elevated stock volatility and greater risk exposure to market swings.
4. Regulatory & Legal
STERIS plc
- Subject to extensive healthcare regulations globally, especially in sterilization processes and medical devices.
Align Technology, Inc.
- Faces rigorous FDA and international dental device regulations, with potential risks from evolving orthodontic treatment standards.
5. Supply Chain & Operations
STERIS plc
- Complex supply chain servicing hospitals and pharma with potential disruptions in sterilization chemicals and capital equipment.
Align Technology, Inc.
- Supply chain risks linked to manufacturing precision aligners and scanners, sensitive to tech component availability.
6. ESG & Climate Transition
STERIS plc
- Operational footprint includes chemical products and energy-intensive sterilizers, facing pressure to reduce emissions.
Align Technology, Inc.
- Digital scanning and manufacturing processes demand sustainable innovation, but fewer direct emissions than chemical-heavy peers.
7. Geopolitical Exposure
STERIS plc
- Global presence with headquarters in Ireland exposes STE to EU regulatory shifts and trade uncertainties.
Align Technology, Inc.
- US-based with significant international sales, vulnerable to US-China tensions and global trade policy changes.
Which company shows a better risk-adjusted profile?
STERIS plc faces its most impactful risk in complex supply chain and regulatory compliance across diverse medical segments. Align Technology’s biggest risk lies in heightened stock volatility and uncertain interest coverage despite low leverage. I find STERIS exhibits a slightly better risk-adjusted profile, supported by safer liquidity and debt metrics. The higher beta and zero interest coverage for Align signal caution in turbulent markets.
Final Verdict: Which stock to choose?
STERIS plc’s superpower lies in its steady value creation despite a slight ROIC deficit to WACC. It demonstrates growing profitability and a robust balance sheet. Its point of vigilance is a relatively high valuation and moderate return on equity. This stock suits a portfolio seeking stable income with moderate growth aspirations.
Align Technology commands a strategic moat through its strong brand and recurring revenue streams in dental innovation. It offers a safety profile marked by low debt and solid cash flow, although recent profitability challenges temper enthusiasm. Align fits well within a GARP framework for investors balancing growth potential with reasonable risk.
If you prioritize consistent value creation and balance sheet strength, STERIS outshines with its improving profitability and financial stability. However, if you seek innovation-driven growth with a defensible market position, Align offers superior strategic advantages despite recent earnings volatility. Both present distinct analytical scenarios for different investor profiles.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of STERIS plc and Align Technology, Inc. to enhance your investment decisions:
