A Fresh Look at StepStone Group (STEP) Valuation Following Major Private Equity Fund Launch

StepStone Group (STEP) has launched the StepStone Private Equity Strategies Fund, an evergreen interval fund that has already attracted more than $750 million since September and is now available on major custodian platforms.

See our latest analysis for StepStone Group.

While the StepStone Private Equity Strategies Fund marks a significant expansion of StepStone’s platform, the share price hasn’t reflected breakout momentum just yet. STEP trades at $62.23. After a choppy stretch, including a tough 30-day share price return of -7%, the longer view reveals a resilient story: the three-year total shareholder return sits at an impressive 130%. Investors are clearly weighing the company’s recent fund launch, strong historical growth, and short-term volatility as they consider the balance of risk and opportunity.

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With the new fund launch generating excitement but share price momentum still lagging, investors must ask themselves whether StepStone’s growth story is already fully reflected in the stock or if a real buying opportunity remains.

Price-to-Sales Ratio of 3.2x: Is it justified?

StepStone Group currently trades at a price-to-sales (P/S) ratio of 3.2x, putting its valuation below both its peer group and the wider US capital markets industry average. With a last close price of $62.23, the stock appears attractively valued versus similar companies on this metric.

The price-to-sales ratio reflects how much investors are willing to pay for each dollar of revenue. For financial services firms, especially those growing their top line, the P/S can be a relevant benchmark, particularly when earnings remain negative. In StepStone's case, this valuation suggests the market is placing faith in the company’s ability to monetize future growth, even while it navigates ongoing unprofitability.

Compared to peers, StepStone's P/S ratio stands out as more attractive: the peer average sits at 5x, while the US capital markets industry at large commands a 4x multiple. However, it's important to note that StepStone’s P/S ratio is significantly above the estimated fair P/S level of 0.9x. This indicates the market is pricing in optimism or future improvement well ahead of its fundamentals. If valuations revert toward that fair ratio, it could signal meaningful downside potential or a shift in sentiment.

Explore the SWS fair ratio for StepStone Group

Result: Price-to-Sales of 3.2x (ABOUT RIGHT)

However, with recent share price declines and ongoing net losses, there is a risk that investor optimism could fade if growth does not accelerate soon.

Find out about the key risks to this StepStone Group narrative.

Build Your Own StepStone Group Narrative

If you see the story differently or want to dive into the details yourself, you can analyze StepStone Group and form your own perspective in just a few minutes. Do it your way

A great starting point for your StepStone Group research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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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.

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