StepStone Group (STEP) heads into its upcoming Q4 2026 report with Wall Street expecting a sharp revenue contraction, as cyclical private market headwinds weigh on fee generation, fundraising momentum and capital deployment.

The recent weak short term share price performance, with the stock down 2.8% on the day and 19.6% year to date to US$53.54, sits against a much stronger backdrop. This includes a 3 year total shareholder return of about 158%, as investors reassess private market fee risks ahead of Q4 and weigh product moves such as the PitchBook data partnership.

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With STEP trading well below its recent highs, yet still carrying a strong 3 year total return, the key question now is simple: are investors being offered a mispriced entry point, or is the stock already reflecting future growth expectations?

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

On a P/S basis, StepStone Group trades at 2.4x revenue, which screens as good value against capital markets peers but expensive versus its own fair-value benchmark.

The P/S multiple compares the company’s market value to its revenue and is often used when earnings are volatile or negative. This fits a business currently reporting a loss of $546.5m on revenue of $1.78b. For an asset manager and private markets platform, investors often look at P/S to gauge how much they are paying for each dollar of fee and investment related revenue when profits are not a stable guide.

Relative to the US Capital Markets industry average P/S of 3.5x and a peer average of 2.8x, the current 2.4x suggests the stock trades at a discount to similar companies. However, compared with an estimated fair P/S ratio of 0.9x, the market price sits well above the level that fair value model points to as a potential anchor. This implies investors are currently paying a richer multiple than that fair ratio suggests the company might warrant.

Result: Price-to-Sales of 2.4x (OVERVALUED).

However, investors also face clear risks, including the current US$546.5m net loss and ongoing pressure on private markets activity, which could affect future fee revenue visibility.

Next Steps

If this mix of solid long term returns and current valuation tension leaves you unsure, treat it as a prompt to review the numbers yourself. You can start by examining the company’s 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.