Step One Clothing Limited (STP) AI Stock Analysis

• Market Cap: AU$59.31M
• Dividend Yield: 20.3%
• Average Volume (3M): 155.68K
• Price to Earnings (P/E): 4.7
• Beta (1Y): 1.90
• Revenue Growth: 2.76%
• EPS Growth: 1.93%
• Country: AU
• Employees: 51
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Apparel - Retail
• EPS (TTM): 0.02
• Shares Outstanding: 185,340,290
• 10 Day Avg. Volume: 172,340
• 30 Day Avg. Volume: 155,679
• PEG Ratio: 13.71
• Price to Book (P/B): 2.46
• Price to Sales (P/S): 1.47
• P/FCF Ratio: 16.02
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: AU$0.30
• Price Target Upside: -14.29% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 2
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 71 Outperform
• Price Target: AU$0.41 ▲(16.86% Upside)

The score is primarily supported by strong financial quality (high margins and an exceptionally low-debt balance sheet) and attractive valuation (low P/E and high dividend yield). These positives are tempered by weak technicals (price below all key moving averages with negative MACD) and financial concerns around 2025 revenue contraction and volatile cash flow.

Positive Factors

High Margins

Exceptionally high gross margins (~74–82%) and mid-teens net margins provide structural profitability and pricing advantage. Sustained margins create a durable cash generation buffer that supports reinvestment in product, operational resilience, and the ability to fund distributions across cycles.

Very Low Leverage

An essentially debt-free balance sheet materially reduces refinancing and interest-rate risk, giving the company financial flexibility. Low leverage supports capacity to absorb sales shocks, fund working-capital needs or opportunistic investments, and preserve capital returns in downturns.

Cash Conversion and ROE

Free cash flow tracking net income and recent ROE in the mid-teens to mid-20s point to efficient capital use and earnings quality. Reliable cash conversion underpins sustainable reinvestment, dividend capacity and reduces reliance on external financing for ordinary growth needs.

Negative Factors

Revenue Contraction

A sharp revenue decline in 2025 and volatile top-line momentum threaten earnings durability; with margins partly dependent on scale, sustained revenue weakness would pressure profits, cash flow and the firm's ability to sustain current operational and capital-return levels without new growth levers.

Inconsistent Cash Coverage

Operating cash flow coverage has been uneven and was negative in 2022, with a material free cash flow decline in 2025. This volatility raises the risk that cash generation may not reliably support capex, working capital swings or distributions during adverse periods, limiting strategic flexibility.

Cyclical Profitability

Historical negative ROE in 2021–2022 shows profitability can reverse markedly, indicating earnings depend on cyclical demand. This cyclicality increases sensitivity to market downturns, complicates long-term planning and makes sustained high returns contingent on restoring and stabilizing revenue trends.

Step One Clothing Limited Business Overview & Revenue Model

Company Description

Step One Clothing Limited operates as a direct-to-consumer online retailer for men's underwear in the United Kingdom, the United States, and Australia. It offers men's underwear products, such as boxer briefs, trunks, and a boxer brief with a fly through its website, www.stepone.life. The company was incorporated in 2017 and is based in Surry Hills, Australia.

How the Company Makes Money

Step One Clothing Limited generates revenue primarily through the sale of its apparel products directly to consumers via its online platform. The company leverages a direct-to-consumer model to keep prices competitive while maintaining quality. Their key revenue streams include online sales of their core products, such as men's and women's underwear. Additionally, Step One Clothing may engage in partnerships with eco-conscious brands and retail platforms to expand its market reach. The company's focus on sustainability and ethical production also attracts a dedicated customer base that values these principles, contributing to its overall earnings.

Step One Clothing Limited Financial Statement Overview

Summary

Strong profitability with high gross margins and mid-teens net margins in recent years, plus a very conservative balance sheet with essentially no debt. Offsetting this are sharply negative revenue growth in 2025 and uneven cash flow coverage, which raise questions about earnings durability and near-term cash generation stability.

Income Statement

Profitability is strong, with consistently high gross margins (~74%–82%) and solid net margins in the mid-teens in the last three annual periods (2023–2025). The business has also recovered well from the 2022 loss year, returning to healthy EBIT and net income. The key weakness is top-line momentum: revenue growth is volatile and turns sharply negative in 2025, which raises questions around demand normalization and sustainability of earnings if sales continue to contract.

Balance Sheet

The balance sheet is very conservatively positioned with essentially no debt (debt-to-equity near zero across periods), reducing refinancing and interest-rate risk. Equity remains sizable relative to assets, and returns on equity are strong in the last three years (roughly mid-teens to mid-20s), indicating efficient capital use. The main watch-out is that profitability is not fully stable over the cycle (negative return on equity in 2021–2022), so the strong recent returns appear somewhat dependent on maintaining current earnings levels.

Cash Flow

Cash conversion is generally good: free cash flow is close to net income in most years, suggesting reported profits are translating into cash. However, operating cash flow coverage is inconsistent (below 1x in several years, and negative in 2022), and free cash flow drops materially in 2025 after a very strong 2024, signaling higher volatility and potential working-capital or operating swings that can pressure near-term liquidity and capital return capacity.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	86.88M	86.88M	84.55M	65.18M	72.19M	61.72M
Gross Profit	62.85M	66.38M	68.33M	48.16M	59.17M	41.99M
EBITDA	16.83M	18.66M	18.84M	11.13M	-267.00K	3.17M
Net Income	12.65M	12.65M	12.40M	8.62M	-3.00M	-118.00K
Balance Sheet
Total Assets	62.13M	62.13M	63.47M	66.12M	63.24M	56.14M
Cash, Cash Equivalents and Short-Term Investments	33.14M	33.14M	38.95M	38.31M	34.21M	41.68M
Total Debt	0.00	0.00	293.00K	0.00	0.00	0.00
Total Liabilities	10.13M	10.13M	11.25M	9.05M	14.60M	12.90M
Stockholders Equity	52.00M	52.00M	52.22M	57.07M	48.64M	43.24M
Cash Flow
Free Cash Flow	7.98M	7.98M	18.49M	4.57M	-8.80M	6.55M
Operating Cash Flow	8.00M	8.00M	18.66M	4.65M	-8.78M	6.60M
Investing Cash Flow	-5.02M	-5.02M	-10.17M	-77.00K	-19.00K	-46.00K
Financing Cash Flow	-14.12M	-14.12M	-17.73M	-571.00K	32.28M	-2.55M

Step One Clothing Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.35
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:STP, the sentiment is Negative. The current price of 0.35 is above the 20-day moving average (MA) of 0.34, below the 50-day MA of 0.36, and below the 200-day MA of 0.56, indicating a bearish trend. The MACD of -0.01 indicates Positive momentum. The RSI at 39.64 is Neutral, neither overbought nor oversold. The STOCH value of 16.98 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:STP.

Step One Clothing Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
STP	71 Outperform	AU$59.31M	4.69	24.28%	20.30%	2.76%	1.93%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
AX1	61 Neutral	AU$546.90M	9.14	12.90%	7.33%	1.58%	-4.71%
UNI	58 Neutral	AU$652.13M	28.36	15.62%	4.70%	15.51%	-32.98%
CCX	55 Neutral	AU$44.29M	-7.93	-24.80%	―	2.35%	95.03%
CTT	45 Neutral	AU$186.81M	-71.01	-7.36%	―	-0.02%	-125.09%

Step One Clothing Limited Corporate Events

Step One Clothing Reports Decline in 1H26 Financial Performance

Step One Clothing Limited has announced a significant decline in its financial performance for the first half of FY26, with expected revenue between $30 million and $33 million, marking a 31% to 37% decrease from the previous year. The company also anticipates an EBITDA loss of $9 million to $11 million, largely due to a $10 million provision for inventory obsolescence. These challenges have led to the withdrawal of the company’s full-year EBITDA guidance as it reassesses its outlook amidst softer sales and inventory issues.

The most recent analyst rating on (AU:STP) stock is a Buy with a A$0.85 price target. To see the full list of analyst forecasts on Step One Clothing Limited stock, see the AU:STP Stock Forecast page.

Step One Clothing Limited Announces Successful AGM Results

Step One Clothing Limited announced the results of its 2025 Annual General Meeting, where all resolutions were passed by poll. The re-election of board members and the approval of the remuneration report reflect strong shareholder support, indicating confidence in the company’s leadership and strategic direction. This outcome is likely to reinforce Step One’s market position and reassure stakeholders of its commitment to sustainable growth.

The most recent analyst rating on (AU:STP) stock is a Buy with a A$0.85 price target. To see the full list of analyst forecasts on Step One Clothing Limited stock, see the AU:STP Stock Forecast page.

Step One Clothing Limited Reports Resilient Growth Amidst Challenging Market Conditions

Step One Clothing Limited held its 2025 Annual General Meeting, addressing the challenges faced over the past year due to economic pressures affecting consumer spending. Despite these challenges, the company reported a revenue increase of 2.8% to $86.9 million and a net profit after tax of $12.6 million. The company emphasized its four-pillar growth strategy, highlighting product innovation, customer acquisition, channel diversification, and international expansion. Key achievements included the launch of a new product line, a 15% growth in customer base, and a significant increase in indirect sales channels. The company remains focused on sustainable, profitable growth and is undertaking a strategic reset to improve performance in FY26.

The most recent analyst rating on (AU:STP) stock is a Buy with a A$0.85 price target. To see the full list of analyst forecasts on Step One Clothing Limited stock, see the AU:STP Stock Forecast page.