Financial Contrast: StepStone Group (NASDAQ:STEP) versus GCM Grosvenor (NASDAQ:GCMG)

StepStone Group (NASDAQ:STEP) and GCM Grosvenor (NASDAQ:GCMG) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Volatility & Risk

StepStone Group has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500. Comparatively, GCM Grosvenor has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500.

Profitability

This table compares StepStone Group and GCM Grosvenor’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
StepStone Group	N/A	11.18%	5.04%
GCM Grosvenor	3.08%	-73.06%	14.43%

Valuation and Earnings

This table compares StepStone Group and GCM Grosvenor”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
StepStone Group	$711.63 million	10.11	$58.09 million	$0.60	104.17
GCM Grosvenor	$445.00 million	5.24	$12.77 million	($0.06)	-205.67

StepStone Group has higher revenue and earnings than GCM Grosvenor. GCM Grosvenor is trading at a lower price-to-earnings ratio than StepStone Group, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

55.5% of StepStone Group shares are held by institutional investors. Comparatively, 100.0% of GCM Grosvenor shares are held by institutional investors. 18.4% of StepStone Group shares are held by company insiders. Comparatively, 77.3% of GCM Grosvenor shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

StepStone Group pays an annual dividend of $0.96 per share and has a dividend yield of 1.5%. GCM Grosvenor pays an annual dividend of $0.44 per share and has a dividend yield of 3.6%. StepStone Group pays out 160.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. GCM Grosvenor pays out -733.3% of its earnings in the form of a dividend. GCM Grosvenor is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent ratings and recommmendations for StepStone Group and GCM Grosvenor, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
StepStone Group	0	4	3	0	2.43
GCM Grosvenor	0	4	1	0	2.20

StepStone Group presently has a consensus price target of $64.36, indicating a potential upside of 2.97%. GCM Grosvenor has a consensus price target of $12.80, indicating a potential upside of 3.73%. Given GCM Grosvenor’s higher probable upside, analysts plainly believe GCM Grosvenor is more favorable than StepStone Group.

Summary

StepStone Group beats GCM Grosvenor on 9 of the 16 factors compared between the two stocks.

About StepStone Group

StepStone Group Inc. is a private equity and venture capital firm specializing in direct, fund of funds, secondary direct, and secondary indirect investments. For direct investment, it seeks to invest in private debt, venture debt, incubation, mezzanine, distressed/vulture, seed/startup, early venture, mid venture, late venture, emerging growth, later stage, turnaround, growth capital, industry consolidation, recapitalization, buyout investments in mature and middle market companies. It prefers to invest in natural resources, technology, healthcare, services, materials, manufacturing, consumer durables, apparel, hotels, restaurants and leisure, media, retailing, power, utilities consumer staples, financials, telecommunication services, clean energy/renewables, transport, social, natural capital, infrastructure, corporate, real estate, credit and real asset. The firm invests globally with a focus on United States, North America, Europe, Asia, Latin America, Middle East, Africa, Brazil, Mexico, Argentina, Colombia, New Zealand, China, India, Korea, Japan, Taiwan, and Australia region. The firm invests between 5% and 40% in emerging markets. For fund of fund investment, it seeks to invest in private equity funds, venture capital funds, Special situation funds, Real estate funds, Infrastructure funds, mezzanine funds, and turnaround/distressed funds. It considers investments in both domestic and international funds. It also seeks to make co-investments and follow-on investments and considers partial interests in funds. StepStone Group Inc. was founded in 2007 and is based in New York, New York with additional offices across North America, South America, Europe, Australia and Asia.

About GCM Grosvenor

GCM Grosvenor Inc. is global alternative asset management solutions provider. The firm primarily provides its services to pooled investment vehicles. It also provides its services to investment companies, high net worth individuals, pension and profit sharing plans and state or municipal government entities. The firm invests in equity and alternative investment markets of the United States and internationally. The firm invests in multi-strategy, credit-focused, equity-focused, macro-focused, commodity-focused, and other specialty portfolios. It focuses in hedge fund asset classes, private equity, real estate, and/or infrastructure, credit and absolute return strategies. It also focuses in primary fund investments, secondary fund investments, and co-investments with a focus on buyout, distressed debt, mezzanine, venture capital/growth equity investments. The firm seeks to do seed investments in small, emerging, and diverse private equity firms. The firm seeks to make regionally-focused investments in middle-market buyout. It prefers to invest in aerospace and defense, advanced electronics, information technology, biosciences, and advanced materials. It focuses on Ohio and the Midwest region. The firm employs fundamental and quantitative analysis. GCM Grosvenor Inc. was founded in 1971 and is based in Chicago, Illinois with additional offices in North America, Asia, Australia and Europe.