Step One Clothing Limited (STP) AI Stock Analysis

• Market Cap: AU$65.80M
• Dividend Yield: 20.3%
• Average Volume (3M): 155.68K
• Price to Earnings (P/E): 5.4
• Beta (1Y): 1.81
• 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 and mid‑teens net margins create a durable earnings buffer. Structural margin strength supports sustained profitability, capacity to fund product development and marketing, and resilience to input cost swings, underpinning long‑term cash generation.

Very low leverage

A nearly debt‑free balance sheet materially reduces refinancing and interest‑rate risk and provides financial flexibility. This enables steady capital allocation, supports dividends or buybacks, and helps the company withstand demand troughs without urgent liquidity pressures.

Strong cash conversion

FCF tracking closely to net income signals high earnings quality and reliable cash conversion. Persistent cash generation supports sustainable dividends, organic reinvestment, and inventory funding, giving management enduring optionality for growth or shareholder returns.

Negative Factors

2025 revenue contraction

A sharp top‑line decline in 2025 weakens growth visibility and jeopardizes the sustainability of current profit levels. Continued revenue contraction would erode operating leverage, reduce reinvestment capacity, and could force margin compression, threatening long‑term earnings durability.

Volatile cash flow coverage

Inconsistent OCF coverage and materially lower free cash flow in 2025 create liquidity volatility. This unpredictability can restrict capital allocation, necessitate external financing for working capital, and make sustained dividends or capex plans harder to maintain over cycles.

Earnings / ROE cyclicality

Historical swings to negative ROE show earnings are cyclical and not fully resilient to downturns. Such volatility reduces predictability of returns on invested capital, complicates long‑term planning, and raises the risk that peak margins may not be sustained across market cycles.

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

Step One Clothing Limited demonstrates strong financial performance, highlighted by significant revenue growth of 29.71% and improved profitability, with a net profit margin of 14.66%. The company maintains low leverage with a debt-to-equity ratio of 0.006 and excellent cash flow management, evidenced by a 304.60% increase in free cash flow. However, a decrease in stockholders' equity needs monitoring.

Income Statement

Step One Clothing Limited has demonstrated strong revenue growth with a solid gross profit margin of 75.03% for 2024. The net profit margin improved significantly to 14.66%, indicating enhanced profitability. The EBIT and EBITDA margins are robust at 22.21% and 22.26%, respectively, reflecting effective cost management. Revenue growth from 2023 to 2024 was a remarkable 29.71%, showcasing the company's successful expansion and market capture.

Balance Sheet

The company's balance sheet shows a healthy equity position with a debt-to-equity ratio of 0.006, indicating very low financial leverage. The equity ratio stands at 82.27%, suggesting a stable financial structure. However, a decline in stockholders' equity from 2023 may require attention to ensure sustained equity strength. The ROE improved to 23.74% in 2024, indicating efficient utilization of equity to generate profits.

Cash Flow

Step One Clothing Limited has shown an impressive free cash flow growth of 304.60% from 2023 to 2024, reflecting robust cash generation capabilities. The operating cash flow to net income ratio is 1.50, indicating strong cash conversion. Additionally, the free cash flow to net income ratio is 1.49, demonstrating high efficiency in converting earnings into cash.

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: Neutral
• Last Price: 0.35
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:STP, the sentiment is Neutral. The current price of 0.35 is above the 20-day moving average (MA) of 0.34, below the 50-day MA of 0.41, and below the 200-day MA of 0.60, indicating a neutral trend. The MACD of -0.01 indicates Negative momentum. The RSI at 52.31 is Neutral, neither overbought nor oversold. The STOCH value of 86.67 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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$65.80M	5.42	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$570.94M	9.19	12.90%	7.33%	1.58%	-4.71%
UNI	58 Neutral	AU$632.95M	27.21	15.62%	4.70%	15.51%	-32.98%
CCX	55 Neutral	AU$50.07M	-9.66	-24.80%	―	2.35%	95.03%
CTT	52 Neutral	AU$306.90M	-118.12	-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.