StepStone Group (STEP) moved higher alongside a sector wide rally in asset managers, with the stock gaining 6.0% as institutional buyers returned to alternative asset management and sentiment around fundraising and deployment improved.

At a share price of US$46.59, StepStone Group has seen a 13.28% 1 month share price return and a decline of 30.06% year to date, while the 3 year total shareholder return of 76.34% points to longer term investors still being ahead despite recent pressure.

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After a sharp 6% jump and a year-to-date decline still in place, StepStone Group now sits in an awkward middle ground. Is this the moment to commit fresh capital, or is it better to wait for a calmer entry point as valuation comes into focus?

Preferred Price-to-Sales of 1.9x: Is It Justified?

At around $46.59 per share, StepStone Group currently trades on a P/S ratio of 1.9x, which screens as expensive relative to its own estimated fair level, yet cheaper than many peers.

The P/S multiple compares the company’s market value to its revenue and is often used when earnings are volatile or negative, which fits StepStone Group given its current losses. For an asset manager focused on private markets, investors often look at this ratio as a shorthand for how much they are paying for each dollar of fee and investment related revenue.

According to the fair ratio workup, StepStone Group is considered expensive relative to an estimated fair P/S of 0.9x. That indicates the current valuation is above a level the market could potentially move toward if sentiment or growth expectations soften. At the same time, the stock is described as good value versus the broader US Capital Markets industry on 3.4x and a peer average of 4.7x, which puts StepStone Group at a discount compared to many direct comparables.

Result: Price-to-Sales of 1.9x (OVERVALUED)

However, StepStone Group still carries risks, including its recent net loss of US$535.808m and relatively modest 1.7% annual revenue growth, which could restrain sentiment.

Next Steps

With sentiment around StepStone Group feeling mixed, it can help to move fast, pull up the key figures yourself, and stress test your own thesis using the 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.