Long-established in the Asset Management industry, StepStone Group Inc (STEP, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 2.68%, juxtaposed with a three-month change of 28.36%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of StepStone Group Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 5/10
- Profitability rank: 5/10
- Growth rank: 0/10
- GF Value rank: 1/10
- Momentum rank: 8/10
Based on the above method, GuruFocus assigned StepStone Group Inc the GF Score of 55 out of 100, which signals poor future outperformance potential.
StepStone Group Inc: A Snapshot
StepStone Group Inc is a private market investment firm with a market cap of $1.94 billion. The company provides customized investment solutions and advisory and data services. It specializes in the areas of private equity, real estate, private debt, and infrastructure and real assets. With sales of $187.66 million and an operating margin of 34.7%, the company has established itself as a significant player in the industry.
Financial Strength Analysis
StepStone Group Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's Altman Z-Score is just 0.74, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.59 indicates a struggle in handling existing debt levels.
Profitability Analysis
StepStone Group Inc's low Profitability rank can also raise warning signals. The company's Operating Margin has declined over the past five years ((-97.62%)), as shown by the following data: 2019: 25.92; 2020: 34.02; 2021: 41.66; 2022: 33.13; 2023: 0.74. Additionally, StepStone Group Inc's Gross Margin has also declined over the past five years, as evidenced by the data: 2019: 45.44; 2020: 46.17; 2021: 48.82; 2022: 42.24; 2023: -253.95. This trend underscores the company's struggles to convert its revenue into profits.
Growth Prospects
A lack of significant growth is another area where StepStone Group Inc seems to falter, as evidenced by the company's low Growth rank. The company's revenue has declined by 0 per year over the past three years, which underperforms worse than 0% of 895 companies in the Asset Management industry. Stagnating revenues may pose concerns in a fast-evolving market. Over the past five years, StepStone Group Inc has witnessed a decline in its earnings before interest, taxes, depreciation, and amortization (EBITDA). The three-year growth rate is recorded at -70.3, while the five-year growth rate is at -27. These figures underscore potential challenges in the company's profitability.
Conclusion
Given StepStone Group Inc's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While the company has a strong reputation in the industry, its current financial indicators suggest that it may struggle to maintain its historical performance. Therefore, investors should exercise caution and conduct thorough research before making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
