Analyzing Zillow Group (NASDAQ:ZG) and System1 (NYSE:SST)
by Danessa Lincoln · The Markets DailyZillow Group (NASDAQ:ZG – Get Free Report) and System1 (NYSE:SST – Get Free Report) are both communication services companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, dividends, earnings, institutional ownership and analyst recommendations.
Analyst Recommendations
This is a summary of current ratings for Zillow Group and System1, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Zillow Group | 2 | 12 | 9 | 0 | 2.30 |
| System1 | 1 | 1 | 1 | 0 | 2.00 |
Zillow Group presently has a consensus target price of $47.67, suggesting a potential upside of 60.91%. System1 has a consensus target price of $6.50, suggesting a potential upside of 297.55%. Given System1’s higher possible upside, analysts plainly believe System1 is more favorable than Zillow Group.
Risk and Volatility
Zillow Group has a beta of 1.95, meaning that its stock price is 95% more volatile than the S&P 500. Comparatively, System1 has a beta of 1.69, meaning that its stock price is 69% more volatile than the S&P 500.
Valuation & Earnings
This table compares Zillow Group and System1″s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Zillow Group | $2.58 billion | 2.58 | $23.00 million | ($0.52) | -56.97 |
| System1 | $266.13 million | 0.06 | -$65.35 million | ($11.31) | -0.14 |
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.
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% | 3.18% | 2.66% |
| System1 | -50.66% | -439.90% | -19.35% |
Institutional & Insider 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 hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Summary
Zillow Group beats System1 on 11 of the 14 factors compared between the two stocks.
About Zillow Group
Zillow Group, Inc. operates real estate brands in mobile applications and Websites in the United States. The company offers premier agent and rentals marketplaces, new construction marketplaces, advertising, display advertising, and business technology solutions, as well as dotloop and floor plans. It also provides mortgage originations and the sale of mortgages, and advertising to mortgage lenders and other mortgage professionals; and title and escrow services. In addition, the company's brand portfolio includes Zillow Premier Agent, Zillow Home Loans, Zillow Rentals, Trulia, StreetEasy, HotPads, and Out East; and a suite of marketing software and technology solutions for the real estate industry, including ShowingTime+, Spruce, and Follow Up Boss. Zillow Group, Inc. was incorporated in 2004 and is headquartered in Seattle, Washington.
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.