Head to Head Analysis: System1 (NYSE:SST) versus Professional Diversity Network (NASDAQ:IPDN)

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

Volatility and Risk

System1 has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500. Comparatively, Professional Diversity Network has a beta of 13.11, indicating that its stock price is 1,211% more volatile than the S&P 500.

Profitability

This table compares System1 and Professional Diversity Network’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
System1	-53.92%	-53.12%	-14.48%
Professional Diversity Network	-54.12%	-186.84%	-65.87%

Valuation & Earnings

This table compares System1 and Professional Diversity Network’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
System1	$401.97 million	0.29	-$227.22 million	($2.27)	-0.57
Professional Diversity Network	$7.32 million	0.75	-$4.31 million	($0.38)	-1.23

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

Insider and Institutional Ownership

87.5% of System1 shares are held by institutional investors. Comparatively, 27.8% of Professional Diversity Network shares are held by institutional investors. 28.3% of System1 shares are held by company insiders. Comparatively, 3.5% of Professional Diversity Network shares are held by company 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.

Analyst Recommendations

This is a breakdown of current ratings and target prices for System1 and Professional Diversity Network, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
System1	0	1	0	0	2.00
Professional Diversity Network	0	0	0	0	N/A

System1 currently has a consensus target price of $2.00, indicating a potential upside of 56.86%. Given System1’s higher possible upside, research analysts clearly believe System1 is more favorable than Professional Diversity Network.

Summary

System1 beats Professional Diversity Network on 7 of the 11 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 Professional Diversity Network

Professional Diversity Network, Inc. operates online professional networking communities with career resources in the United States. It operates through three segments: Professional Diversity Network (PDN Network), National Association of Professional Women (NAPW Network), and RemoteMore USA (RemoteMore). The company offers online professional job seeking communities that offers recruitment services, such as single and multiple job postings, recruitment media, talent recruitment communities, corporate memberships, hiring campaign marketing and advertising, e-newsletter marketing, and research and outreach services to various cultural groups and employers. It also provides consumer advertising and consumer marketing solutions through advertising and job postings on its websites; and contracted software development services. In addition, the company operates a women-only professional networking organization; and offers companies with talented engineers to provide solutions to their software needs. Professional Diversity Network, Inc. was incorporated in 2003 and is headquartered in Chicago, Illinois.