STEP
StepStone Group Inc.
$43.42
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 26.1% below fair value
You pay
$43.42
Bear
$41.12
Fair
$58.74
Bull
$76.36
Bear
$41.12
-5.3%
ROTCE 4.0% → 0.30x TBV
Fair
$58.74
+35.3%
ROTCE 0.0% → 0.30x TBV
Bull
$76.36
+75.9%
ROTCE 0.0% → 0.30x TBV
Key Value Driver
ROTCE (0.0%) vs. cost of equity (11.5%)
Implied Market Multiple
1.52x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $65.40 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $58.74 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 (11.5%). This means the bank is worth less than the net assets on its books.
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