Over the past six months, StepStone Group’s stock price fell to $48.28. Shareholders have lost 15.1% of their capital, which is disappointing considering the S&P 500 has climbed by 13.1%. This was partly driven by its softer quarterly results and might have investors contemplating their next move.
Following the pullback, is this a buying opportunity for STEP? Find out in our full research report, it’s free.
Why Does STEP Stock Spark Debate?
Operating as both an advisor and asset manager with over $100 billion in assets under management, StepStone Group (NASDAQ: STEP) is an investment firm that provides clients with access to private market investments across private equity, real estate, private debt, and infrastructure.
Two Positive Attributes:
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
Luckily, StepStone Group’s revenue grew at an incredible 26.9% compounded annual growth rate over the last five years. Its growth beat the average financials company and shows its offerings resonate with customers.
2. EPS Increasing Steadily
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
StepStone Group’s EPS grew at a solid 14.7% compounded annual growth rate over the last five years. This performance was better than most financials businesses.
One Reason to Be Careful:
Previous Growth Initiatives Have Lost Money
Return on equity, or ROE, quantifies financial firm profitability relative to shareholder equity — an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.
Over the last five years, StepStone Group has averaged an ROE of negative 10.6%, a disappointing result relative to the majority of firms putting up 25%+. But we wouldn’t write off StepStone Group given its success in other measures of financial health.
Final Judgment
StepStone Group’s merits more than compensate for its flaws. After the recent drawdown, the stock trades at 18.8× forward P/E (or $48.28 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
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