Assessing StepStone Group (STEP) Valuation After Strong Oversubscription Of Credit Opportunities Fund II

Fundraising milestone and credit platform in focus

StepStone Group (STEP) recently closed its StepStone Credit Opportunities Fund II with more than US$1.58b in commitments, above its US$750m target. This has put fresh attention on the firm’s private credit platform and stock.

See our latest analysis for StepStone Group.

Despite the successful SCOF II fundraise, the shares have been volatile, with a 1-day share price return showing a 5.64% decline and a 90-day share price return showing a 29.08% decline, while the 3-year total shareholder return of 156.44% highlights how strong long-term holders have fared.

If this kind of private markets story interests you, it could be a good moment to broaden your watchlist and check out 19 top founder-led companies

With STEP down 22% year to date but still showing a 3-year total return above 150%, and trading at a discount to the current analyst price target, is there a genuine opportunity here, or is the market already pricing in future growth?

Preferred price to sales multiple: Is it justified?

On a P/S of 2.3x, StepStone Group is priced below both its direct peer group average of 4.2x and the broader US Capital Markets industry average of 3.6x, even after the recent share price pullback.

The P/S multiple compares the company’s market value to its revenue and is often used when earnings are patchy or negative, which fits STEP’s current unprofitable status. For a global private markets platform generating $1,782.8m of revenue, a lower P/S can sometimes reflect concerns about earnings quality or profitability rather than top line potential.

Here, there is a tension. On one side, the stock screens as good value against peers and the industry on P/S. On the other side, an estimated fair P/S of 0.8x suggests the current 2.3x level is expensive relative to where a regression based “fair” multiple implies the market could eventually settle if expectations moderate.

That contrast with the fair multiple is sharp. It prompts a closer look at how STEP’s business model, profitability path and private markets exposure stack up against companies that cluster nearer to that lower fair ratio.Explore the SWS fair ratio for StepStone Group

Result: Price-to-sales of 2.3x (ABOUT RIGHT)

However, there are clear pressure points, including STEP’s current net loss of US$546.5m and a 29.08% 90-day share price decline, that could unsettle sentiment.

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

Next Steps

With mixed signals on valuation and sentiment, it makes sense to look under the hood yourself and not just rely on headlines. If you are weighing the opportunity against the concerns being flagged, take a moment to review the 2 important warning signs

Looking for more investment ideas?

If STEP has your attention, do not stop there. Use the screener to quickly spot other ideas that could round out your watchlist and keep you ahead of the crowd.

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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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