Grom Social Enterprises (NASDAQ:GROM) vs. System1 (NYSE:SST) Critical Review

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

Profitability

This table compares System1 and Grom Social Enterprises’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
System1	-24.18%	-68.85%	-18.27%
Grom Social Enterprises	N/A	N/A	N/A

Insider & Institutional Ownership

87.5% of System1 shares are owned by institutional investors. Comparatively, 15.9% of Grom Social Enterprises shares are owned by institutional investors. 14.1% of System1 shares are owned by company insiders. Comparatively, 0.0% of Grom Social Enterprises shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares System1 and Grom Social Enterprises”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
System1	$343.93 million	0.11	-$227.22 million	($1.07)	-0.38
Grom Social Enterprises	$3.72 million	0.00	-$12.53 million	($11.67)	0.00

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for System1 and Grom Social Enterprises, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
System1	0	0	1	0	3.00
Grom Social Enterprises	0	0	0	0	0.00

System1 presently has a consensus target price of $5.00, indicating a potential upside of 1,125.49%. Given System1’s stronger consensus rating and higher possible upside, research analysts clearly believe System1 is more favorable than Grom Social Enterprises.

Risk and Volatility

System1 has a beta of 1.38, suggesting that its share price is 38% more volatile than the S&P 500. Comparatively, Grom Social Enterprises has a beta of 1.75, suggesting that its share price is 75% more volatile than the S&P 500.

Summary

System1 beats Grom Social Enterprises on 8 of the 14 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 Grom Social Enterprises

Grom Social Enterprises, Inc., through its subsidiaries, operates as a media, technology, and entertainment company in the United States and Philippines. It operates through three segments: Animation, Original Content, and Social and Technology. The company operates a social media network for children under the age of 13 years. It also produces animated films and televisions series; and provides web filtering services to schools and government agencies, as well as acquires, develops, and builds commercial potential of kids and family entertainment properties and associated business opportunities. Grom Social Enterprises, Inc. was founded in 2012 and is headquartered in Boca Raton, Florida.