Head to Head Review: System1 (NYSE:SST) & Alphabet (NASDAQ:GOOGL)

System1 (NYSE:SST) and Alphabet (NASDAQ:GOOGL) are both business services companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitability, institutional ownership and earnings.

Volatility and Risk

System1 has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500. Comparatively, Alphabet has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500.

Earnings and Valuation

This table compares System1 and Alphabet’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
System1	$365.77 million	0.35	-$227.22 million	($2.27)	-0.63
Alphabet	$307.39 billion	7.04	$73.80 billion	$6.52	26.85

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

Institutional and Insider Ownership

87.5% of System1 shares are held by institutional investors. Comparatively, 40.0% of Alphabet shares are held by institutional investors. 28.3% of System1 shares are held by company insiders. Comparatively, 11.6% of Alphabet shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
System1	-49.23%	-42.08%	-12.99%
Alphabet	25.90%	29.52%	20.74%

Dividends

System1 pays an annual dividend of $0.32 per share and has a dividend yield of 22.3%. Alphabet pays an annual dividend of $0.80 per share and has a dividend yield of 0.5%. System1 pays out -14.1% of its earnings in the form of a dividend. Alphabet pays out 12.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. System1 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current recommendations and price targets for System1 and Alphabet, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
System1	0	1	1	0	2.50
Alphabet	0	5	30	1	2.89

System1 currently has a consensus target price of $3.50, suggesting a potential upside of 144.76%. Alphabet has a consensus target price of $193.26, suggesting a potential upside of 10.38%. Given System1’s higher probable upside, research analysts clearly believe System1 is more favorable than Alphabet.

Summary

Alphabet beats System1 on 11 of the 17 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 Alphabet

Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.