Critical Comparison: Zillow Group (NASDAQ:ZG) vs. System1 (NYSE:SST)

Zillow Group (NASDAQ:ZG) and System1 (NYSE:SST) are both communication services companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, institutional ownership and profitability.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Zillow Group and System1, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Zillow Group	3	11	9	0	2.26
System1	1	1	1	0	2.00

Zillow Group presently has a consensus price target of $47.67, suggesting a potential upside of 58.31%. System1 has a consensus price target of $6.50, suggesting a potential upside of 565.98%. Given System1’s higher probable upside, analysts clearly believe System1 is more favorable than Zillow Group.

Insider and Institutional Ownership

20.3% of Zillow Group shares are held by institutional investors. Comparatively, 87.5% of System1 shares are held by institutional investors. 29.9% of Zillow Group shares are held by insiders. Comparatively, 10.2% of System1 shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Zillow Group	-3.95%	3.23%	2.67%
System1	-85.62%	-439.90%	-29.68%

Valuation & Earnings

This table compares Zillow Group and System1″s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Zillow Group	$2.86 billion	2.37	$23.00 million	($0.52)	-57.90
System1	$266.13 million	0.04	-$65.35 million	($11.31)	-0.09

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

Volatility and Risk

Zillow Group has a beta of 1.95, indicating that its share price is 95% more volatile than the S&P 500. Comparatively, System1 has a beta of 1.69, indicating that its share price is 69% more volatile than the S&P 500.

Summary

Zillow Group beats System1 on 11 of the 14 factors compared between the two stocks.

About Zillow Group

Zillow Group, Inc. operates a digital real estate marketplace focused primarily on the United States. Its websites and mobile apps help consumers find homes for sale and rent, explore neighborhood information, and research home values. The company’s brands include Zillow, Trulia, StreetEasy and HotPads. Zillow Group also provides services for real estate professionals, including advertising and customer-management tools, and offers mortgage services through Zillow Home Loans. Zillow launched in 2006, founded by Rich Barton and Lloyd Frink, and grew into a parent company with multiple real estate brands and services.

About System1

System1, Inc. is a digital advertising and customer-acquisition company. Its technology platform connects consumers searching online for information, products, and services with advertisers and publisher partners. The company uses consumer intent data and automated advertising tools to match online searches and other digital interactions with relevant advertising. Its business includes both marketing services for partners and a portfolio of consumer-facing websites and digital products. System1’s brands have included MapQuest, HowStuffWorks, and CouponFollow, which offer services such as mapping and navigation, informational content, and savings resources.