Why StepStone Group Stock Is In Focus Now

StepStone Group (STEP) is back on investors radar after JPMorgan Chase moved to restrict lending to private credit providers, prompting StepStone to limit fund redemptions and triggering a sharp sector wide selloff.

Despite a 4.06% 1 day share price return to US$45.09, StepStone’s 30 day share price return of 20.56% and year to date share price return of 32.31% show momentum has recently faded, even as its 3 year total shareholder return of 104.65% points to a much stronger long term picture.

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With shares down 29.01% over 90 days and 32.31% year to date, yet trading well below the average analyst price target of US$79.71, you have to ask: is this a reset that opens the door, or is the market already baking in the growth story?

Preferred Price-to-Sales Multiple of 2x: Is It Justified?

On a simple P/S basis, StepStone Group trades at 2x sales, which looks cheaper than many peers even though the share price has pulled back recently.

The P/S ratio compares the company’s market value to its revenue and is often used for businesses that are not currently profitable. For an asset manager and private markets platform like StepStone, where earnings can swing with performance fees and investment cycles, investors often look at revenue based measures as a cleaner starting point.

Against the US Capital Markets industry average P/S of 3.3x and a peer average of 4.4x, StepStone’s 2x multiple stands out as materially lower. However, Simply Wall St’s fair P/S estimate of 0.8x suggests the current market valuation is rich compared to the level the fair ratio model points to.

Result: Price-to-sales of 2x (ABOUT RIGHT).

However, you still have to weigh StepStone’s recent 1 year total return decline of 15.28% and its US$546.53m net loss as potential pressure points.

Next Steps

With sentiment clearly mixed, this is a moment to move quickly, review the facts for yourself, and decide how much risk you are comfortable carrying, starting with 3 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.