WEBULL
WebtradeDownload

Is StepStone Group (STEP) Fairly Valued As Its New Portfolio Tool Tries To Win Clients?

Simply Wall St · 2d ago

StepStone Group (STEP) just rolled out its StepStone Total Portfolio Allocator, an interactive tool that lets wealth professionals model how adding private markets might change portfolio risk and return profiles.

That launch lands at an interesting time for StepStone Group, with the share price at US$42.04 after a 1-day share price decline of 3.29% and a year-to-date share price return down 36.89%, even as the 3-year total shareholder return sits at 63.66% and suggests that longer term holders have still seen meaningful gains.

Scan how other private markets specialists are positioned by comparing StepStone Group with a curated list of 21 high quality undiscovered gems that are also building tools and data advantages in this corner of the market.

The slide in StepStone Group’s share price contrasts sharply with its longer term return record and recent product push. Is the market marking down the business or just resetting sentiment, and how does that show up in the current valuation?

Preferred Price-to-Sales Multiple of 1.7x for StepStone Group: Is it justified?

On a simple sales based lens, StepStone Group trades at a P/S ratio of 1.7x, while the shares last closed at $42.04 and analysts have a price target of $65.70, which implies the market may be weighing the current challenges against future potential quite differently to the sell side.

P/S compares the company’s market value to its revenue and is often used for financial groups where earnings can be volatile or currently loss making. For a global private markets platform like StepStone Group, this metric lets you compare how investors are pricing each dollar of fees and related revenues against both peers and an estimated fair level.

Relative to the US Capital Markets industry average P/S of 3.3x, the stock trades at a materially lower sales multiple, and the peer group sits even higher at 4.3x. Yet internal fair value work suggests a P/S of 0.7x would be more in line with fundamentals. That gap between 1.7x and the 0.7x fair ratio points to a level the valuation could move toward if the market leans harder into the company’s current unprofitable status, slow forecast revenue growth of 2.6% per year, and the use of higher risk funding sources.

Explore the SWS fair ratio for StepStone Group.

Result: Price-to-sales of 1.7x (OVERVALUED)

Still, the story can change quickly if StepStone Group remains loss making on US$2.0b of revenue, or if private markets fundraising demand cools further.

Find out about the key risks to this StepStone Group narrative.

Next Steps

Mixed signals on StepStone Group’s shares and valuation can be confusing, so treat this as a prompt to inspect the underlying numbers yourself and move quickly to form your own view. To weigh both sides of the debate in one place, start with the 1 key reward and 1 important warning sign.

Looking for more StepStone Group sized ideas?

Do not stop your research with StepStone Group. Broaden your watchlist with a few focused screens that surface different types of opportunities before others act.