StepStone Group (NASDAQ:STEP) Announces Quarterly Earnings Results, Beats Estimates By $0.11 EPS

StepStone Group (NASDAQ:STEP) posted its earnings results on Thursday. The company reported $0.66 earnings per share for the quarter, beating the consensus estimate of $0.55 by $0.11, FiscalAI reports. The company had revenue of $362.71 million for the quarter, compared to analyst estimates of $324.84 million. StepStone Group had a positive return on equity of 43.38% and a negative net margin of 30.53%.

Here are the key takeaways from StepStone Group’s conference call:

• StepStone reported record fee-related earnings of $126 million, up 61% year over year, with a 42% core FRE margin and adjusted earnings of $0.66 per share. Management cautioned that 42% is not a near-term run rate as recently hired staff and seasonal conference costs increase expenses; the company also reported a $71 million GAAP net loss, driven by a required fair-value adjustment related to the private wealth profits interest.
• Fundraising reached a company record, with $43 billion of gross AUM additions over the past 12 months. Fee-earning AUM rose to $158 billion and undeployed fee-earning capital reached a record $42 billion, providing a substantial base for future fee growth.
• Private wealth funds attracted $1.7 billion in subscriptions during the quarter, and the platform exceeded $23 billion in assets; redemptions were just 2%. Management cited continued growth in distribution partners and cross-selling, while viewing retirement-plan access as a longer-term opportunity.
• Management said higher rates and sluggish exits are weighing on private-market distributions, but expects secondaries and other liquidity solutions to remain important. More than $1 billion of net accrued carry is mostly tied to older programs, though the timing of realizations remains difficult to predict.
• StepStone plans to retain cash that would otherwise fund this fiscal year’s supplemental dividend as it prepares to exercise its option to buy in private wealth profits interests. The regular quarterly dividend of $0.33 per share is unchanged.

StepStone Group Trading Up 10.8%

NASDAQ STEP traded up $4.64 on Friday, hitting $47.45. 1,926,606 shares of the stock were exchanged, compared to its average volume of 825,946. The company’s 50-day moving average price is $45.68 and its two-hundred day moving average price is $49.03. The company has a debt-to-equity ratio of 1.22, a current ratio of 0.19 and a quick ratio of 0.19. StepStone Group has a 52-week low of $38.85 and a 52-week high of $77.79. The company has a market capitalization of $5.66 billion, a price-to-earnings ratio of 20.01 and a beta of 1.28.

StepStone Group Announces Dividend

The business also recently announced a quarterly dividend, which will be paid on Tuesday, December 15th. Stockholders of record on Monday, November 30th will be given a dividend of $0.33 per share. The ex-dividend date of this dividend is Monday, November 30th. This represents a $1.32 dividend on an annualized basis and a dividend yield of 2.8%. StepStone Group’s payout ratio is -17.10%.

More StepStone Group News

Here are the key news stories impacting StepStone Group this week:

• Positive Sentiment: StepStone reported quarterly EPS of $0.66, above the $0.55 consensus estimate, and revenue of $362.71 million versus estimates of $324.84 million. EPS also increased from $0.54 a year earlier, supporting the view that results were stronger than expected. Quarterly earnings results
• Positive Sentiment: Royal Bank of Canada raised its price target to $68 from $65 and reiterated an “outperform” rating. Barclays lifted its target to $65 from $62 and kept an “overweight” rating. The target increases signal improved analyst expectations for the shares. Royal Bank of Canada rating Barclays rating
• Neutral Sentiment: The company declared a quarterly dividend of $0.33 per share, payable December 15 to shareholders of record November 30. The annualized payout is $1.32 per share, a 2.8% yield at the cited share price; the dividend may appeal to income-focused investors but is not as direct a growth catalyst as the earnings beat.

Analyst Ratings Changes

Several brokerages have issued reports on STEP. Wall Street Zen downgraded shares of StepStone Group from a “hold” rating to a “sell” rating in a research report on Saturday, August 15th. Barclays raised their price target on shares of StepStone Group from $62.00 to $65.00 and gave the company an “overweight” rating in a report on Friday. BMO Capital Markets dropped their price target on shares of StepStone Group from $58.00 to $48.00 and set an “outperform” rating on the stock in a research note on Tuesday, October 27th. Royal Bank Of Canada raised their target price on StepStone Group from $65.00 to $68.00 and gave the company an “outperform” rating in a research note on Friday. Finally, Evercore reissued an “outperform” rating and issued a $56.00 price target on shares of StepStone Group in a report on Friday, August 7th. Eight investment analysts have rated the stock with a Buy rating, two have assigned a Hold rating and one has issued a Sell rating to the company. Based on data from MarketBeat.com, the company presently has a consensus rating of “Moderate Buy” and an average target price of $66.78.

About StepStone Group

StepStone Group, Inc is a global investment firm focused on private markets. The company provides investment solutions and advisory services to institutional investors, family offices, and other clients seeking exposure to privately held and alternative assets.

Its activities include investments in private equity, venture capital, private debt, infrastructure, and real estate. StepStone builds customized portfolios through primary investments in funds, secondary-market transactions, and direct investments in companies and assets.