Head to Head Survey: HealthStream (NASDAQ:HSTM) versus System1 (NYSE:SST)

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
System1	$401.97 million	0.34	-$227.22 million	($2.27)	-0.67
HealthStream	$279.06 million	3.04	$15.21 million	$0.58	48.10

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for System1 and HealthStream, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
System1	0	1	1	0	2.50
HealthStream	0	1	2	0	2.67

System1 presently has a consensus target price of $3.50, suggesting a potential upside of 130.26%. HealthStream has a consensus target price of $32.00, suggesting a potential upside of 14.70%. Given System1’s higher probable upside, research analysts plainly believe System1 is more favorable than HealthStream.

Institutional & Insider Ownership

87.5% of System1 shares are owned by institutional investors. Comparatively, 69.6% of HealthStream shares are owned by institutional investors. 28.3% of System1 shares are owned by insiders. Comparatively, 20.6% of HealthStream shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

System1 has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500. Comparatively, HealthStream has a beta of 0.38, suggesting that its stock price is 62% less volatile than the S&P 500.

Profitability

This table compares System1 and HealthStream’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%
HealthStream	6.30%	5.21%	3.56%

Summary

HealthStream beats System1 on 9 of the 14 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 HealthStream

HealthStream, Inc. provides Software-as-a-Service (SaaS) based applications for healthcare organizations in the United States. The company's solutions help healthcare organizations in meeting their ongoing clinical development, talent management, training, education, assessment, competency management, safety and compliance, and scheduling, as well as provider credentialing, privileging, and enrollment needs. It offers hStream, a technology platform that powers a range of healthcare workforce solutions. The company provides its solutions to customers across a range of entities within the healthcare industry, including private, not-for-profit, and government entities, as well as pharmaceutical and medical device companies through its direct sales teams. The company was incorporated in 1990 and is headquartered in Nashville, Tennessee.