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Sotera Health (SHC): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q3 2026, to Sep 30, 2026, filed Nov 3, 2026; rules v1.1
Sotera Health (SHC): 0 rules of 10 triggered on the filings to Sep 30, 2026. 1 to review; 3 with insufficient data; 2 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
Low P/E at a cyclical peak = undervalued To review · confidence medium
Net income of $173M is at a high against a median of $44M over eight years; at 30.1× the market is not pricing it as cheap, but a multiple on this year's profit still understates the mid-cycle one (117.8×).
Every rule
A01 FCF growth = the business improved Not triggered confidence medium
Free cash flow rose $104M to $149M; working capital and lower capex explain 39% of it, so most of the gain is in operating cash flow itself.
The figures and how they are read
| Fiscal year before | FY2024 |
| Fiscal year | FY2025 |
| Operating cash flow, year before | $224M |
| Operating cash flow | $287M |
| Capex, year before | $179M |
| Capex | $138M |
| Free cash flow, year before | $45M |
| Free cash flow | $149M |
| Change in FCF | $104M |
| Change in capex | −$41M |
| Working capital: change in its cash contribution | −$5M |
| Of which: capex cut | $41M |
| Of which: working capital released | 0.00 |
| Share of the increase that need not repeat | +39.4% |
| Operating cash flow before working capital: change | 68407000.00 |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY2025 (cash flow statement, fiscal year) · FY2024 (cash flow statement, fiscal year before)
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 2.7% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY2025 |
| Stock compensation | $31M |
| Revenue | $1.2B |
| SBC / revenue | +2.6% |
| Buybacks | 0 |
| Buybacks / SBC | 0.0 |
| Diluted shares, year before | 284.9M shares |
| Diluted shares | 286.4M shares |
| Diluted shares: change | +0.5% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY2025 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Not triggered confidence medium
Receivables grew 7% against revenue 4% in Q3 2026; DSO 43 against a median of 43: collections are keeping pace with sales.
The figures and how they are read
| Quarter | Q3 2026 |
| Revenue, year over year | +4.4% |
| Receivables, year over year | +7.3% |
| Quarter before | Q2 2026 |
| Revenue y/y, quarter before | +9.2% |
| Receivables y/y, quarter before | +10.2% |
| Days sales outstanding | 42.9 |
| DSO, median of eight quarters | 42.7 |
| Receivables | $153M |
| Revenue | $325M |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q3 2026 (receivables and revenue) · Q3 2025 (the same quarter a year earlier)
B08 Adjusted profit = economic profit Insufficient data
no reconciliation table read from the releases yet and fewer than three quarters with both an adjusted and a GAAP EPS
C02 Low net debt = no refinancing risk Not triggered confidence medium
$14M comes due within a year, 38.5× covered by cash and investments of $412M plus $135M of free cash flow.
The figures and how they are read
| Cash and investments | $412M |
| Debt | $2.1B |
| Net debt | $1.7B |
| Due within a year | $14M |
| Read from | the debt maturity table |
| Free cash flow, twelve months | $135M |
| Cash plus free cash flow | $548M |
| Coverage of what is due | 38.5 |
| Due in the second year | $14M |
| Balance sheet date | 2026-09-30 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: FY2025 (debt maturities, cash and investments)
D03 EPS growth = profit growth Insufficient data
no quarter with EPS, net income and diluted shares for both this year and last
E02 Low P/E at a cyclical peak = undervalued To review confidence medium
Net income of $173M is at a high against a median of $44M over eight years; at 30.1× the market is not pricing it as cheap, but a multiple on this year's profit still understates the mid-cycle one (117.8×).
The figures and how they are read
| market value | $5.2B |
| net income ttm | $173M |
| pe ttm | 30.10 |
| net income median fy | $44M |
| pe mid cycle | 117.80 |
| net income peak fy | $117M |
| years | FY2019 / -21.0; FY2020 / -39.0; FY2021 / 117.0; FY2022 / -234.0; FY2023 / 51.0; FY2024 / 44.0; FY2025 / 78.0 |
| down years in window | 3 |
P/E on the trailing twelve months' net income against the P/E on the median net income of the last eight fiscal years (a mid-cycle stand-in); 'at a peak' = this year's profit at or above 90% of the best year and at least 1.3× the median
Source: Q3 2026 (net income, trailing twelve months)
What would show the trap does not apply
- Profit holds at this level through the next two years (the eight-year peak was a new base, not a top)
- The industry's capacity and prices stay where they are rather than reverting
Look again: next filing.
E07 A precise DCF value = the true value Insufficient data
no DCF in the valuation research for this company
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → Sotera Health: cash flow →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.