StepStone Group (NasdaqGS:STEP) - Share price, News & Analysis

Q: What is the Fair Price of STEP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

STEP ($27.8) is trading below our estimate of [[fair value]] ($83.58)

STEP fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	0/6
Past Performance	6/6
Financial Health	4/6
Dividends	3/6

STEP Stock Overview

StepStone Group Inc. is an investment firm specializing in direct, fund of funds, secondary direct, and secondary indirect investments.

Rewards

Trading at 66.7% below our estimate of its fair value

Earnings grew by 209.6% over the past year

Risk Analysis

Unstable dividend track record

Shareholders have been diluted in the past year

StepStone Group Competitors

Focus Financial Partners

NasdaqGS:FOCS

US$2.9b

Artisan Partners Asset Management

NYSE:APAM

US$3.0b

Cohen & Steers

NYSE:CNS

US$3.3b

Fairfax India Holdings

OTCPK:FFXD.F

US$1.6b

Price History & Performance

Summary of all time highs, changes and price drops for StepStone Group
Historical stock prices
Current Share Price	US$27.80
52 Week High	US$55.19
52 Week Low	US$22.39
Beta	0
1 Month Change	-0.43%
3 Month Change	-19.09%
1 Year Change	-18.19%
3 Year Change	n/a
5 Year Change	n/a
Change since IPO	11.20%

Shareholder Returns

	STEP	US Capital Markets	US Market
7D	6.5%	6.8%	6.6%
1Y	-18.2%	-18.0%	-18.4%

Return vs Industry: STEP matched the US Capital Markets industry which returned -18% over the past year.

Return vs Market: STEP matched the US Market which returned -18.4% over the past year.

Price Volatility

Is STEP's price volatile compared to industry and market?
STEP volatility
STEP Average Weekly Movement	6.8%
Capital Markets Industry Average Movement	0.5%
Market Average Movement	8.1%
10% most volatile stocks in US Market	16.6%
10% least volatile stocks in US Market	3.2%

Stable Share Price: STEP is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: STEP's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2007	790	Scott Hart	https://www.stepstonegroup.com/

StepStone Group Inc. is an investment firm specializing in direct, fund of funds, secondary direct, and secondary indirect investments. For direct investment, it seeks to invest in venture debt, incubation, mezzanine, distressed/vulture, seed/startup, early venture, mid venture, late venture, emerging growth, later stage, turnaround, growth capital, industry consolidation, recapitalization, and buyout investments in mature and middle market companies. It prefers to invest in natural resources, technology, healthcare, services, materials, manufacturing, consumer durables, apparel, hotels, restaurants and leisure, media, retailing, consumer staples, financials, telecommunication services, energy, infrastructure, real estate, and real asset.

StepStone Group Fundamentals Summary

How do StepStone Group's earnings and revenue compare to its market cap?
STEP fundamental statistics
Market Cap	US$3.10b
Earnings (TTM)	US$193.89m
Revenue (TTM)	US$1.37b

8.8x

P/E Ratio

1.2x

P/S Ratio

Is STEP overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
STEP income statement (TTM)
Revenue	US$1.37b
Cost of Revenue	US$802.70m
Gross Profit	US$562.83m
Other Expenses	US$368.95m
Earnings	US$193.89m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	3.17
Gross Margin	41.22%
Net Profit Margin	14.20%
Debt/Equity Ratio	3.4%

How did STEP perform over the long term?

See historical performance and comparison

Dividends

2.9%

Current Dividend Yield

11%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is STEP undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for STEP?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for STEP. This is calculated by dividing STEP's market cap by their current preferred multiple.
What is STEP's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$3.10b

STEP key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2x
Enterprise Value/EBITDA	5.4x
PEG Ratio	n/a

Price to Earnings Ratio vs Peers

How does STEP's PE Ratio compare to its peers?

STEP PE Ratio vs Peers

The above table shows the PE ratio for STEP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	22.9x
FOCS Focus Financial Partners	61.2x	20.7%	US$2.9b
APAM Artisan Partners Asset Management	8.8x	2.2%	US$3.0b
CNS Cohen & Steers	16.3x	5.8%	US$3.3b
FFXD.F Fairfax India Holdings	5.4x	n/a	US$1.6b
STEP StepStone Group	8.8x	n/a	US$3.1b

Forward PE

Price-To-Earnings vs Peers: STEP is good value based on its Price-To-Earnings Ratio (8.8x) compared to the peer average (22.9x).

Price to Earnings Ratio vs Industry

How does STEP's PE Ratio compare vs other companies in the US Capital Markets Industry?

Price-To-Earnings vs Industry: STEP is good value based on its Price-To-Earnings Ratio (8.8x) compared to the US Capital Markets industry average (29.6x)

Price to Earnings Ratio vs Fair Ratio

What is STEP's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

STEP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	8.8x
Fair PE Ratio	n/a

Price-To-Earnings vs Fair Ratio: Insufficient data to calculate STEP's Price-To-Earnings Fair Ratio for valuation analysis.

Share Price vs Fair Value

What is the Fair Price of STEP when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: STEP ($27.8) is trading below our estimate of fair value ($83.58)

Significantly Below Fair Value: STEP is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate STEP's PEG Ratio to determine if it is good value.

Discover undervalued companies

Future Growth

How is StepStone Group forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-18.5%

Forecasted annual revenue growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if STEP's forecast earnings growth is above the savings rate (1.9%).

Earnings vs Market: Insufficient data to determine if STEP's earnings are forecast to grow faster than the US market

High Growth Earnings: Insufficient data to determine if STEP's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: STEP's revenue is expected to decline over the next 3 years (-18.5% per year).

High Growth Revenue: STEP's revenue is forecast to decline over the next 3 years (-18.5% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: STEP's Return on Equity is forecast to be low in 3 years time (10.4%).

Discover growth companies

Past Performance

How has StepStone Group performed over the past 5 years?

Past Performance Score

6/6

Past Performance Score 6/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

31.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: STEP has high quality earnings.

Growing Profit Margin: STEP's current net profit margins (14.2%) are higher than last year (8%).

Past Earnings Growth Analysis

Earnings Trend: STEP's earnings have grown significantly by 31% per year over the past 5 years.

Accelerating Growth: STEP's earnings growth over the past year (209.6%) exceeds its 5-year average (31% per year).

Earnings vs Industry: STEP earnings growth over the past year (209.6%) exceeded the Capital Markets industry 80.5%.

Return on Equity

High ROE: STEP's Return on Equity (26.5%) is considered high.

Discover strong past performing companies

Financial Health

How is StepStone Group's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: STEP's short term assets ($1.7B) do not cover its short term liabilities ($2.0B).

Long Term Liabilities: STEP's short term assets ($1.7B) exceed its long term liabilities ($366.9M).

Debt to Equity History and Analysis

Debt Level: STEP has more cash than its total debt.

Reducing Debt: Insufficient data to determine if STEP's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: STEP's debt is well covered by operating cash flow (340.8%).

Interest Coverage: STEP earns more interest than it pays, so coverage of interest payments is not a concern.

Balance Sheet

Discover healthy companies

Dividend

What is StepStone Group current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

2.88%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: STEP's dividend (2.88%) is higher than the bottom 25% of dividend payers in the US market (1.57%).

High Dividend: STEP's dividend (2.88%) is low compared to the top 25% of dividend payers in the US market (4.23%).

Stability and Growth of Payments

Stable Dividend: Too early to tell whether STEP's dividend payments have been stable as they only just started paying a dividend.

Growing Dividend: Too early to tell if STEP's dividend payments are increasing as they only just started paying a dividend.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (11.3%), STEP's dividend payments are thoroughly covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (42%), STEP's dividend payments are well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.5yrs

Average management tenure

CEO

Scott Hart (41 yo)

0.42

Tenure

US$1,640,876

Compensation

Mr. Scott W. Hart serves as Chief Executive Officer of StepStone Group Inc. since January 01, 2022. He serves as Head of Private Equity & Director at StepStone Group Inc and has been its Director since Sep...

CEO Compensation Analysis

Compensation vs Market: Scott's total compensation ($USD1.64M) is below average for companies of similar size in the US market ($USD6.87M).

Compensation vs Earnings: Scott's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: STEP's management team is not considered experienced ( 1.5 years average tenure), which suggests a new team.

Board Members

Experienced Board: STEP's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 17.5%.

Data	Last Updated (UTC time)
Company Analysis	2022/06/27 00:00
End of Day Share Price	2022/06/27 00:00
Earnings	2022/03/31
Annual Earnings	2022/03/31