Omnicom Group (NYSE:OMC) and System1 (NYSE:SST) Financial Survey

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

Insider and Institutional Ownership

87.5% of System1 shares are held by institutional investors. Comparatively, 92.0% of Omnicom Group shares are held by institutional investors. 13.2% of System1 shares are held by insiders. Comparatively, 1.0% of Omnicom Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

System1 pays an annual dividend of $0.32 per share and has a dividend yield of 9.2%. Omnicom Group pays an annual dividend of $2.80 per share and has a dividend yield of 3.7%. System1 pays out -3.7% of its earnings in the form of a dividend. Omnicom Group pays out 41.4% 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.

Analyst Recommendations

This is a summary of current recommendations for System1 and Omnicom Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
System1	1	0	1	0	2.00
Omnicom Group	0	4	5	0	2.56

System1 presently has a consensus price target of $10.00, indicating a potential upside of 187.36%. Omnicom Group has a consensus price target of $96.57, indicating a potential upside of 29.17%. Given System1’s higher probable upside, analysts clearly believe System1 is more favorable than Omnicom Group.

Profitability

This table compares System1 and Omnicom Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
System1	-22.78%	-109.87%	-15.60%
Omnicom Group	8.31%	33.30%	5.73%

Volatility & Risk

System1 has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500. Comparatively, Omnicom Group has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500.

Valuation & Earnings

This table compares System1 and Omnicom Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
System1	$289.78 million	0.12	-$74.67 million	($8.53)	-0.41
Omnicom Group	$16.07 billion	0.90	$1.48 billion	$6.77	11.04

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

Summary

Omnicom Group beats System1 on 11 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 Omnicom Group

Omnicom Group Inc., together with its subsidiaries, offers advertising, marketing, and corporate communications services. It provides a range of services in the areas of advertising and media, precision marketing, commerce and branding, experiential, execution and support, public relations, and healthcare. The company's services include advertising, branding, content marketing, corporate social responsibility consulting, crisis communications, custom publishing, data analytics, database management, digital/direct marketing and post-production, digital transformation consulting, entertainment marketing, experiential marketing, field marketing, sales support, financial/corporate business-to-business advertising, graphic arts/digital imaging, healthcare marketing and communications, and instore design services. Its services also comprise interactive marketing, investor relations, marketing research, media planning and buying, retail media planning and buying, merchandising and point of sale, mobile marketing, multi-cultural marketing, non-profit marketing, organizational communications, package design, product placement, promotional marketing, public affairs, public relations, retail marketing, retail media and e-commerce, search engine marketing, shopper marketing, social media marketing, and sports and event marketing services. It operates in the North and Latin America, Europe, the Middle East and Africa (EMEA), and the Asia Pacific. The company was incorporated in 1944 and is based in New York, New York.