National CineMedia (NASDAQ:NCMI – Get Free Report) and System1 (NYSE:SST – Get Free Report) are both small-cap business services companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.
Volatility and Risk
National CineMedia has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500. Comparatively, System1 has a beta of 1.56, suggesting that its share price is 56% more volatile than the S&P 500.
Institutional and Insider Ownership
69.5% of National CineMedia shares are held by institutional investors. Comparatively, 87.5% of System1 shares are held by institutional investors. 0.3% of National CineMedia shares are held by company insiders. Comparatively, 13.2% of System1 shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| National CineMedia | $243.20 million | 1.36 | -$10.60 million | ($0.10) | -35.50 |
| System1 | $343.92 million | 0.09 | -$74.67 million | ($8.53) | -0.36 |
National CineMedia has higher earnings, but lower revenue than System1. National CineMedia is trading at a lower price-to-earnings ratio than System1, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares National CineMedia and System1’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| National CineMedia | -4.32% | -2.29% | -1.74% |
| System1 | -22.78% | -109.87% | -15.60% |
Analyst Recommendations
This is a summary of current recommendations and price targets for National CineMedia and System1, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| National CineMedia | 0 | 3 | 3 | 0 | 2.50 |
| System1 | 1 | 0 | 1 | 0 | 2.00 |
National CineMedia presently has a consensus price target of $5.38, suggesting a potential upside of 51.41%. System1 has a consensus price target of $10.00, suggesting a potential upside of 225.73%. Given System1’s higher possible upside, analysts plainly believe System1 is more favorable than National CineMedia.
Summary
National CineMedia beats System1 on 8 of the 14 factors compared between the two stocks.
About National CineMedia
National CineMedia, Inc., through its subsidiary, National CineMedia, LLC, operates cinema advertising network in North America. It engages in the sale of advertising to national, regional, and local businesses in Noovie, a cinema advertising and entertainment show seen on movie screens; and sells advertising on its Lobby Entertainment Network, a series of strategically-placed screens located in movie theater lobbies, as well as other forms of advertising and promotions in theatre lobbies. The company also sells online and mobile advertising through its Noovie Audience Accelerator product across a suite of Noovie digital properties, such as Name That Movie and Noovie Trivia app to reach entertainment audiences beyond the theater. It offers its services to third-party theater circuits under long-term network affiliate agreements. The company was incorporated in 2006 and is headquartered in Centennial, Colorado.
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.
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