STEP
StepStone Group Inc.
$41.89
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 162.5% above fair value
You pay
$41.89
Bear
$11.17
Fair
$15.96
Bull
$20.75
Bear
$11.17
-73.3%
ROTCE 4.0% → 0.30x TBV
Fair
$15.96
-61.9%
ROTCE 0.0% → 0.30x TBV
Bull
$20.75
-50.5%
ROTCE 0.0% → 0.30x TBV
Adjust Assumptions
0.0%
11.4%
Key Value Driver
ROTCE (0.0%) vs. cost of equity (11.4%)
Implied Market Multiple
5.25x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (8 analysts)
$63.63
Divergence from AlphaVal
75%
Summary
With ROTCE of 0.0% vs. 11.4% cost of equity, fair P/TBV is 0.30x on $7.98 tangible book, implying $15.96 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (0.0%) is below the minimum investors require (11.4%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $63.63 (from 8 analysts). Our estimate is 75% below the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly