Reviewing HealthStream (NASDAQ:HSTM) and System1 (NYSE:SST)

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

Dividends

System1 pays an annual dividend of $0.32 per share and has a dividend yield of 21.1%. HealthStream pays an annual dividend of $0.11 per share and has a dividend yield of 0.4%. System1 pays out -14.1% of its earnings in the form of a dividend. HealthStream pays out 19.0% 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.

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 large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

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%

Analyst Ratings

This is a summary of recent ratings and price targets for System1 and HealthStream, as provided by MarketBeat.

	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 currently has a consensus price target of $3.50, indicating a potential upside of 131.79%. HealthStream has a consensus price target of $32.00, indicating a potential upside of 15.52%. Given System1’s higher possible upside, equities analysts plainly believe System1 is more favorable than HealthStream.

Risk & 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.

Valuation and Earnings

This table compares System1 and HealthStream’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
System1	$365.77 million	0.37	-$227.22 million	($2.27)	-0.67
HealthStream	$279.06 million	3.02	$15.21 million	$0.58	47.76

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.

Summary

HealthStream beats System1 on 9 of the 16 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.