Monday, August 22, 2016


Sound bite for Twitter and StockTwits is: Probably relatively expensive. They hit a low in stock prices in 2008 and they have been rising since. They are making no profit but have very good cash flow. Book Value is negative and debt ratios are low. See my spreadsheet on ONEX Corp.

I do not own this stock of ONEX Corp. (TSX-OCX, OTC-ONEXF), but I used to. I thought this was a dividend paying stock, but was mistaken. A stock that keeps its dividend level year after year is not a true dividend stock.

The thing to comments on is that for the shareholders of this company, the book value is negative. This is never a good sign. The stock price has been climbing over the past few years, but is down by 5.7% this year. Quarter 2 of 2016 is the first time for a while that the company has been making a profit. Profit for this second quarter was $1.30.

Let us start with the dividend. I have dividend information going back to 1992. Dividends were $0.10 from 1992 to 1994 when they were increased to $0.11. They did not change for around 18 year until 2013. There have been good dividend increases since then, but the dividend yield is still extremely low at just $0.34%

Dividend growth over the past 5 and 10 years is 15.39% and 7.42% per year. This does not really reflect what is going on because over the past 5 and 10 years there was years with no increases. The median recent increase is 23%. However, the last increase for this year was 10%.

Another problem is that they cannot afford their dividends because they have not had a profit over the past 4 years. However, the cash flows are very good with Dividend Payout Ratio for CFPS at 0.78% in 2015 and the 5 year median is also 0.78%. This is extremely low.

The outstanding shares have been declining lately by some 2.2% and 2.6% per year over the past 5 and 10 years. Therefore I would not look at per share growth but at Revenue rather than Revenue per share or Net Income rather than EPS. For example Revenue declined by 4.3% over the past 5 years but was up by 3.3% over the past 10 years. Revenue per Share declined by 2.1% over the past 5 years, but is up by 3.1% over the past 10 years.

I cannot stock price test using P/E Ratio because of a string of earnings losses over the last several years. I cannot calculate a Graham Price because of this string of earnings losses and also because the book value is negative. I also cannot use book value to test stock price because of the negative book value.

The historical median dividend yield is 0.54%. The current dividend yield at 0.34% is some 36% lower. The current dividend yield is based on dividends of $0.28 and a stock price of $79.98. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median P/S Ratio is 0.18. The current P/S Ratio at 0.32 is some 76% higher. The current P/S Ratio is based on Revenue of $20,406M for the 12 month period ending June 2016 of the second quarter. The revenue per share would be $192.62 and the stock price used would be $79.98. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/CFPS Ratio is 3.39. The current P/CF Ratio is 3.74 based on a stock price of $79.98 and Cash Flow of $1,755M and CFPS of $16.96 based on the 12 month period to the end of June 2016. The stock price used is $79.98. This stock price testing suggests that the stock price is relatively reasonable but above the median.

Although no analyst is giving out estimates there are 6 analysts giving out recommendations on this stock. There are Strong Buy, Buy and Hold recommendations. Most are Hold recommendations, but the consensus recommendation would be a Buy. The 12 month stock price consensus is $84.62. This implies a total return of just 6.15% with 5.80% from capital gains and 0.34% from dividends. This is based on a stock price of $79.98.

Renee Jackson on Cerbat Gem talks about Canaccord Genuity giving this stock a buy rating and upping their price target. Barry Critchley in an article on Financial Post talks about Onex using IPO to spin off JELD-WEN Holding Inc. This is not the normal method this company has used. See what analysts are saying about this company on Stock Chase

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see that report here.

The last stock I wrote about was about was BlackBerry Ltd. (TSX-BB, NASDAQ-BBRY)... learn more . The next stock I will write about will be Evertz Technologies (TSX-ET, OTC-EVTZF)... learn more on Wednesday, August 24, 2016 around 5 pm. On Wednesday, August 14, 2016, on my other blog I will write about Dividend Growth again... learn more on Tuesday, August 23, 2016 around 5 pm.

Onex is one of North America's oldest investment firm committed to acquiring and building high-quality businesses in partnership with talented management teams. Onex manages investment platforms focused on private equity, real estate and credit securities. Gerald Schwartz is a major owner. Its web site is here ONEX Corp.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.

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