Sculptor Capital Management (NYSE:SCU) and StepStone Group (NASDAQ:STEP) Critical Review

Sculptor Capital Management (NYSE:SCU) and StepStone Group (NASDAQ:STEP) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Sculptor Capital Management and StepStone Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sculptor Capital Management 0 1 1 0 2.50
StepStone Group 0 2 1 0 2.33

Sculptor Capital Management currently has a consensus target price of $32.00, indicating a potential upside of 65.03%. StepStone Group has a consensus target price of $44.00, indicating a potential upside of 2.33%. Given Sculptor Capital Management’s stronger consensus rating and higher possible upside, equities analysts clearly believe Sculptor Capital Management is more favorable than StepStone Group.

Insider and Institutional Ownership

23.5% of Sculptor Capital Management shares are held by institutional investors. 13.8% of Sculptor Capital Management shares are held by insiders. Comparatively, 35.3% of StepStone Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Sculptor Capital Management has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, StepStone Group has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500.

Profitability

This table compares Sculptor Capital Management and StepStone Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sculptor Capital Management 22.10% 122.79% 37.58%
StepStone Group 13.97% 20.30% 10.08%

Dividends

Sculptor Capital Management pays an annual dividend of $1.12 per share and has a dividend yield of 5.8%. StepStone Group pays an annual dividend of $0.28 per share and has a dividend yield of 0.7%. Sculptor Capital Management pays out 26.1% of its earnings in the form of a dividend. StepStone Group pays out 6.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. StepStone Group has increased its dividend for 1 consecutive years.

Valuation & Earnings

This table compares Sculptor Capital Management and StepStone Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sculptor Capital Management $897.02 million 1.23 $177.63 million $4.29 4.52
StepStone Group $787.72 million 5.90 $62.63 million $4.60 9.35

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

Summary

Sculptor Capital Management beats StepStone Group on 9 of the 16 factors compared between the two stocks.

Sculptor Capital Management Company Profile

Sculptor Capital Management, Inc. is a global alternative asset management firm providing investment products in a range of areas including multi-strategy, credit and real estate. The company serves global clients through commingled funds, separate accounts and specialized products. Its distinct investment process seeks to generate attractive and consistent risk-adjusted returns across market cycles through a combination of fundamental bottom-up research, a high degree of flexibility, a collaborative team and integrated risk management. The company’s capabilities span all major geographies, in strategies including fundamental equities, corporate credit, real estate debt and equity, merger arbitrage, structured credit and private investments. The company was founded by Daniel Saul Och in 1994 and is headquartered in New York, NY.

StepStone Group Company Profile

StepStone Group Inc. is an investment firm specializing in direct, fund of funds, secondary direct, and secondary indirect investments. For direct investment, it seeks to invest in venture debt, incubation, mezzanine, distressed/vulture, seed/startup, early venture, mid venture, late venture, emerging growth, later stage, turnaround, growth capital, industry consolidation, recapitalization, and 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, consumer staples , financials, telecommunication services, energy, infrastructure, real estate, 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. It typically invests between $15 million and $200 million in firms with enterprise value between $150 million and $25000 million. 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 LP was founded in 2007 and is based in New York, New York with additional offices across North America, Europe, Australia, and Asia.

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