Federated Hermes, Inc. (FHI) vs StepStone Group Inc. (STEP)

Federated Hermes, Inc. and StepStone Group Inc. are both Asset Management companies. Federated Hermes, Inc. and StepStone Group Inc. are of similar size ($5.2B and $4.7B). StepStone Group Inc. has negative trailing earnings, so its P/E is not meaningful; Federated Hermes, Inc. trades at 11.6×. StepStone Group Inc. grew revenue faster over the last twelve months: 48.5% against 13.2%. Federated Hermes, Inc. has the higher net margin (20.3% vs −30.5%) and the higher return on invested capital (27.1% vs −42.5%). Both pay a dividend; StepStone Group Inc. yields more (4.03% vs 2.25%). Across the 18 metrics below, Federated Hermes, Inc. leads on 14 and StepStone Group Inc. on 4.

Valuation

Metric FHI STEP Asset Management median
P/E 11.56 n/m 13.38
P/S 2.31 1.74 2.99
P/B 3.52 3.60 0.91
Price to free cash flow 11.79 n/m 7.79
EV/EBITDA — — —
EV/Sales — — —
Earnings yield 8.65% (18.11%) 4.67%
Free cash flow yield 8.48% (12.57%) 4.85%

Profitability

Metric FHI STEP Asset Management median
Gross margin 100.00% 100.00% 100.00%
Operating margin 27.80% (58.22%) 27.27%
Net margin 20.32% (30.53%) 11.89%
Free cash flow margin 19.55% (21.88%) 5.96%
Return on equity 32.33% (55.72%) 4.57%
Return on assets 17.23% (9.77%) 1.40%
Return on invested capital 27.06% (42.51%) 2.12%

Growth

Metric FHI STEP Asset Management median
Revenue growth (TTM) 13.16% 48.46% 7.26%
EPS growth (last fiscal year) 58.82% (169.05%) (5.64%)
Revenue growth, 5-year CAGR 4.45% 20.41% 11.84%
Net income growth, 5-year CAGR 4.34% 0.00% 0.00%

Health

Metric FHI STEP Asset Management median
Debt to equity 0.27 1.50 0.40
Current ratio 2.48 0.19 1.23
Net debt to EBITDA (0.44) (0.08) 1.06

Dividend

Metric FHI STEP Asset Management median
Dividend yield 2.25% 4.03% 6.43%
Payout ratio 0.26 — 0.91

Size

Metric FHI STEP Asset Management median
Market cap 4.73b 5.17b 692.54m

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