StepStone Group (STEP) stock is in focus after the company announced a partnership with PitchBook to distribute its proprietary deal level benchmarks through PitchBook’s data platform, targeting users in private equity, venture capital, growth equity, and infrastructure.

Recent trading reflects this, with a 1-day share price return of 1.04% and a 30-day share price return of 14.86%, although the year to date share price return of negative 18.65% and 90-day share price return of negative 13.20% show momentum has been rebuilding from a weaker patch. Over a longer horizon, the 3-year total shareholder return of 172.87% and 5-year total shareholder return of 100.11% contrast with a modest 0.54% total shareholder return over the last year, underlining how sentiment has cooled even as interest in private markets data partnerships, such as PitchBook, has grown.

If this kind of deal data story interests you, it can be worth broadening your watchlist to other private markets and PE-linked ideas via the 18 top founder-led companies

With STEP trading at US$54.19 and a consensus analyst price target of US$71.38, the stock sits at a roughly 32% discount. The question for you is whether this gap signals an opportunity or if the market is already accounting for future growth.

Preferred Price-to-Sales of 2.4x: Is it justified?

On a simple sales-based lens, StepStone Group trades on a P/S of 2.4x, which sits below both its industry and direct peer averages despite the recent share price rebound.

The P/S ratio compares the company’s market value with its revenue, so a lower figure can suggest investors are paying less for each dollar of sales than they are for similar capital markets businesses.

For StepStone Group, that lower P/S stands against a mixed picture. The company is currently loss making with a reported loss of $546.5m over revenue of $1.78b, and earnings have declined at a very large annual rate over the past 5 years, yet revenue is still forecast to grow at 3% per year. At the same time, the estimated fair P/S ratio is 0.9x, well below the current 2.4x. This points to a level the market could move towards if sentiment were to fully reflect that regression-based estimate.

Compared with the wider US Capital Markets industry average P/S of 3.6x, StepStone Group trades on a much lower multiple, and it also sits below the 2.8x peer average. This gap reinforces how investors are currently pricing its revenue versus other listed platforms that operate in similar markets.

Result: Price-to-sales of 2.4x (OVERVALUED)

However, the company is still loss making, with a US$546.5m net loss and only modest 2.99% annual revenue growth. This could limit how much investors are willing to pay.

Next Steps

With mixed signals on valuation and profitability in mind, it makes sense to move quickly and stress test the story yourself 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.