Zhihu (NYSE:ZH – Get Free Report) and System1 (NYSE:SST – Get Free Report) are both small-cap communication services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, risk, valuation, dividends and profitability.
Analyst Recommendations
This is a summary of current ratings and recommmendations for Zhihu and System1, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Zhihu | 1 | 0 | 0 | 0 | 1.00 |
| System1 | 1 | 0 | 1 | 0 | 2.00 |
System1 has a consensus target price of $6.50, suggesting a potential upside of 286.90%. Given System1’s stronger consensus rating and higher probable upside, analysts plainly believe System1 is more favorable than Zhihu.
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Zhihu | $393.10 million | 0.74 | -$27.58 million | ($0.36) | -9.12 |
| System1 | $266.13 million | 0.06 | -$65.35 million | ($11.31) | -0.15 |
Zhihu has higher revenue and earnings than System1. Zhihu 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 Zhihu and System1’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Zhihu | -7.25% | -4.83% | -3.60% |
| System1 | -50.66% | -439.90% | -19.35% |
Insider & Institutional Ownership
28.9% of Zhihu shares are held by institutional investors. Comparatively, 87.5% of System1 shares are held by institutional investors. 13.6% of Zhihu shares are held by insiders. Comparatively, 10.2% of System1 shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Risk and Volatility
Zhihu has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500. Comparatively, System1 has a beta of 1.55, indicating that its share price is 55% more volatile than the S&P 500.
Summary
Zhihu beats System1 on 8 of the 14 factors compared between the two stocks.
About Zhihu
Zhihu Inc. operates an online content community in the People’s Republic of China. Its community allows people to seek inspiration, find solutions, make decisions, and have fun. The company offers technology, business support, and consulting services; information transmission, software, and information technology services. It also offers information and marketing services; vocational training; and internet services, as well as holds audio-visual permit. Zhihu Inc. was founded in 2010 and is headquartered in Beijing, the People’s Republic of China.
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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