Analyzing System1 (NYSE:SST) and TechTarget (NASDAQ:TTGT)

System1 (NYSE:SST) and TechTarget (NASDAQ:TTGT) are both small-cap business services companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, valuation, profitability, risk, analyst recommendations and institutional ownership.

Profitability

This table compares System1 and TechTarget’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
System1	-22.43%	-92.07%	-15.92%
TechTarget	-252.96%	-21.56%	-13.65%

Institutional and Insider Ownership

87.5% of System1 shares are held by institutional investors. Comparatively, 93.5% of TechTarget shares are held by institutional investors. 13.2% of System1 shares are held by insiders. Comparatively, 0.9% of TechTarget shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares System1 and TechTarget”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
System1	$343.92 million	0.22	-$74.67 million	($9.63)	-0.78
TechTarget	$284.90 million	1.57	-$116.86 million	($0.42)	-14.86

System1 has higher revenue and earnings than TechTarget. TechTarget is trading at a lower price-to-earnings ratio than System1, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for System1 and TechTarget, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
System1	0	0	1	0	3.00
TechTarget	1	1	4	0	2.50

System1 currently has a consensus price target of $10.00, suggesting a potential upside of 33.16%. TechTarget has a consensus price target of $16.40, suggesting a potential upside of 162.82%. Given TechTarget’s higher probable upside, analysts clearly believe TechTarget is more favorable than System1.

Volatility & Risk

System1 has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, TechTarget has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500.

About System1

System1, Inc. provides omnichannel customer acquisition platform services through its proprietary responsive acquisition marketing platform in the United States, the United Kingdom, Canada, the Netherlands, and internationally. It operates through two segments: Owned and Operated Advertising, and Partner Network. The company engages in the provision of acquiring traffic to its owned and operated websites, as well as revenue-sharing arrangements and related services. It also operates MapQuest, a web-based navigation service that delivers turn-by-turn direction services to users; Info.com, a metasearch engine that consumers can use to search for relevant information; HowStuffWorks, a commercial website focused on helping people solve problems in their daily lives by using various types of digital media to easily breakdown and explain complex concepts, topics, terminology and mechanisms; Startpage, a private search engine that allows users to browse and search the Internet in complete privacy; and CouponFollow for coupon destinations for online shoppers, as well as ActiveBeat and Infospace. In addition, the company provides antivirus software solutions, which offers customers a single packaged solution that provides protection and reporting to the end users. The company is based in Los Angeles, California.

About TechTarget

TechTarget, Inc., together with its subsidiaries, provides marketing and sales services that deliver business impact for business-to-business technology companies in North America and internationally. The company's service enables technology vendors to identify, reach, and influence corporate information technology (IT) decision-makers actively researching specific IT purchases; and customized marketing programs that integrate demand generation, brand advertising techniques, and content curation and creation. It offers business to business services, such as IT Deal Alert, a suite of data, software, and services comprising Priority Engine and Qualified Sales Opportunities to identify and prioritize accounts and individuals actively researching new technology purchases or upgrades; demand solutions provides marketing programs, including white papers, webcasts, podcasts, videocasts, virtual trade shows, and content sponsorships; brand solutions which includes on-network banner advertising and digital sponsorships, off-network banner targeting, and microsites and related formats; custom content creation that delivers market insights and guidance to technology companies and off-the-shelf editorial sponsorship products on topics aligned to customer markets; and BrightTALK platform which allows customers to create, host and promote webinars, virtual events, and video content. In addition, the company operates websites, webinars, and virtual event channels that focus on a specific IT sector, such as storage, security, or networking; and enables registered members to conduct their pre-purchase research by accessing vendor supplied content through its virtual event and webinar channels, and website networks. TechTarget, Inc. was incorporated in 1999 and is headquartered in Newton, Massachusetts.