STEP
StepStone Group Inc.
$53.74
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 9.0% below fair value
You pay
$53.74
Bear
$41.32
Fair
$59.02
Bull
$76.73
Bear
$41.32
-23.1%
ROTCE 4.0% → 0.30x TBV
Fair
$59.02
+9.8%
ROTCE 0.0% → 0.30x TBV
Bull
$76.73
+42.8%
ROTCE 0.0% → 0.30x TBV
Key Value Driver
ROTCE (0.0%) vs. cost of equity (11.6%)
Implied Market Multiple
1.88x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $66.80 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $59.02 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 (11.6%). 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