System1 (NYSE:SST – Get Free Report) and Stagwell (NASDAQ:STGW – Get Free Report) are both small-cap business services companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, risk, institutional ownership and valuation.
Institutional & Insider Ownership
87.5% of System1 shares are held by institutional investors. Comparatively, 35.6% of Stagwell shares are held by institutional investors. 13.2% of System1 shares are held by insiders. Comparatively, 3.8% of Stagwell shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares System1 and Stagwell”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 | 0.20 | -$74.67 million | ($9.63) | -0.73 |
| Stagwell | $2.84 billion | 0.51 | $2.26 million | N/A | N/A |
Stagwell has higher revenue and earnings than System1.
Volatility & Risk
System1 has a beta of 1.39, indicating that its stock price is 39% more volatile than the S&P 500. Comparatively, Stagwell has a beta of 1.47, indicating that its stock price is 47% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of current recommendations and price targets for System1 and Stagwell, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| System1 | 0 | 0 | 1 | 0 | 3.00 |
| Stagwell | 0 | 3 | 3 | 0 | 2.50 |
System1 currently has a consensus price target of $10.00, suggesting a potential upside of 42.76%. Stagwell has a consensus price target of $8.17, suggesting a potential upside of 45.15%. Given Stagwell’s higher probable upside, analysts clearly believe Stagwell is more favorable than System1.
Profitability
This table compares System1 and Stagwell’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% |
| Stagwell | -0.06% | 14.54% | 2.79% |
Summary
Stagwell beats System1 on 10 of the 13 factors compared between the two stocks.
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 Stagwell
Stagwell Inc. provides digital transformation, performance media and data, consumer insights and strategy, and creativity and communications services. The company operates through three segments: Integrated Agencies Network, Brand Performance Network, and Communications Network. It designs and builds digital platforms and experiences that support the delivery of content, commerce, service, and sales; creates websites, mobile applications, back-end systems, content and data management systems, and other digital environments; designs and implements technology and data strategies; and develops software and related technology products, including artificial intelligence (AI)-enabled communications, research, and media technology, cookie-less data platforms for advance targeting and activation, software tools for e-commerce applications, specialty media solutions in the augmented reality space, and text messaging applications for consumer engagement. The company also provides audience analysis, and media buying and planning services; and strategic insights and guidance services that offers business content, product, communications, and media strategies. In addition, it offers strategy development, advertising creation, live events, immersive digital experiences, cross platform engagement, and social media content services; and leadership, investor and financial relations, social media, executive positioning and visibility, strategic communication, public relation, and public affair services. Further, the company provides Stagwell Marketing Cloud, a suite of software-as-a-service (SaaS) and data-as-a-service (DaaS) technology solutions, including research and insights, communications technology, advance media platform, and media studios; and technology-driven solutions for in-house marketers. Stagwell Inc. is headquartered in New York, New York.
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