Shares of the System1 customer acquisition platform (SST) have gained enviable price momentum since their January stock market debut. However, given the company’s poor profitability, is it worth adding the stock to his portfolio now? Continue reading. Let’s find out.
System1 Inc. Omnichannel Customer Acquisition Platform (OSH) in Los Angeles, California, debuted on January 28, 2022. The company uses technology and data science to run a responsive acquisition marketing platform. Additionally, the organization runs a real-time coupon code search engine and directory that provides coupon destinations for internet customers.
Its shares have gained 145.5% in price year-to-date to close yesterday’s trading session at $24.45.
However, SST’s negative profit margin could cause investors to worry about its near-term prospects. Additionally, analyst price targets also point to a potential downside for the stock, making its outlook bleak.
Here’s what could shape SST’s performance in the short term:
SST’s gross profit margin of 14.6% over the last 12 months is 71.3% below the industry average of 50.8%. Its trailing 12-month operating cash flow of $60.71 million is 79.3% below the industry average of $292.88 million. In addition, his last 12 months net profit margin and leveraged FCF margin are 7.9% and 47.2% lower than their respective industry averages.
The price target indicates a potential decline
The 12-month median price target of $20.50 indicates a Upside potential of 16.2%. Price targets range from a low of $15.00 to a high of $26.00.
POWR ratings reflect uncertainty
SST has an overall D rating, which is equivalent to Selling in our own POWR Rankings system. POWR ratings are calculated by considering 118 separate factors, with each factor weighted to an optimal degree.
Our proprietary scoring system also rates each stock against eight distinct categories. SST has a D rating for quality. The company’s low profitability is consistent with the Quality rating.
Of the 89 A-rated shares Industrial – Services industry, SST is ranked #81.
Beyond what I said above, one can see the SST ratings for Value, Stability, Momentum, Growth and Sentiment here.
While the company has the potential to capitalize on its multiple long-term strategic acquisitions, we believe SST’s growth potential is currently limited due to its low profitability and analyst price targets. Therefore, we believe the stock is shunned now.
How does System1 Inc. (SST) compare to its peers?
Although SST has an overall D rating, one might consider its industry peers, PT United Tractors Tbk (PUTKY), Koc Holding AS (KHOLY) and DLH Holdings Corp. (DLHC), which have an overall rating of A (Strong Buy).
SST shares fell $0.42 (-1.72%) in premarket trading on Thursday. Year-to-date, the SST has gained 145.48%, compared to a -6.37% rise in the benchmark S&P 500 over the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college, she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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