Onex Corp

Sound bite for Twitter and StockTwits is: Not real div stock. I would not buy again. I would not buy any company with a dividend yield less than 1% and this has never reached 1%. See my spreadsheet on ONEX Corp.

I do not own this stock of Onex Corp (TSX-ONEX, 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. I bought this stock in 2001 because it was on a stock hit list article I read. By April 2008, I knew that this was not the sort of stock I wanted to be invested, so I sold. Over 6 years I made 5.8% return per year.

Since 2013 they have started to raise the dividends. They report in US$, but they pay dividends in CDN$. Dividends have gone up recently by 19% and 9.1% per year over the past 5 and 10 years. However, the dividend yield is very, very low. The current dividend is 0.31% based on a stock price of $96.87 and dividends of $0.30. This may technically be a dividend growth company, but dividends are still far too low to call this a dividend paying stock.

Another problem is that fact that the Long Term Debt/Market Cap Ratio is 3.27 for 2016. Anything close to 1.00 is a big problem. This is way over 1.00. Other problem is the Intangible/Market Cap Ratio is 1.33 and the Goodwill/Market Cap ratio is 1.31 for 2016. These are also big problems when getting close to 1.00.

There are very few estimates for this company. However, I did get some for EPS at $0.26 and $0.50 US$. With the second quarter, ONEX is reporting EPS of $17.06 US$. However, this seems to be sale of discontinued business. At least with the second quarter, the book value for shareholders is now positive.

Because of all the earnings losses, especially since 2010, the 5 and 10 year Price/Earnings per Share ratios are negative. The historical ones are far too low to make sense. For example, the historical high is just 3.88. The current P/E Ratio is 292.10 based on a stock price of $96.87 and 2017 EPS estimate of $0.33 CDN$ or $0.26 US$. This is also not a rational P/E Ratio. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $13.87 CDN$ (when I include the 2017 estimate of .33CDN$ in GP formula). The 10 year low median and high median Price/Graham Price Ratios are 1.04, 1.49 and 1.82. The current P/GP Ratio is 6.98 based on a stock price of $96.87 CDN$. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio 2.14 CDN$. The current P/B Ratio is 3.76 CDN$ and this is 75% higher than the 10 year median ratio. Current ratio is based on Book Value of $26,533M CDN$, BVPS of $25.79 CDN$ and stock price of $96.87 CDN$. You get similar results in US$. This stock price testing suggests that the stock price is relatively expensive. (Note that until the second quarter BV was negative for 2 years.) In 2014 BVPS was only $8.58 CDN$.

The historical dividend yield is 0.54%. The current dividend yield is 0.31%. The current dividend is based on dividends of $0.30 CDM$and a stock price of $96.87 CDN$ or $76.41 US$. The current dividend yield is some 43% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 0.17 CDN$. The current P/S Ratio is 037 a value some 116% lower. The current P/S Ratio is based on Revenue for the last 12 months to the end of the second quarter of $26,645M CDN$ ($21,125M US$), Revenue per Share of $216.89 CDN$ and a stock price of $96.87 CDN$. This stock price testing suggests that the stock price is relatively expensive. However, the P/S Ratio of 0.37 is a very low one.

When I look at analysts' recommendations, I find Strong Buy (1) and Hold (4). The consensus would be a Hold recommendation. The 12 month stock price is $101.79. This implies a total return of 5.39% with 5.08% from capital gains and 0.31% from dividends.

Onex Corp reports on their second quarterly results on Market Wired. David Owens on Simply Wall Street discusses CEO compensation as it applied to Onex. See what analysts are saying about this company on Stock Chase. They seem to like it.

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.

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 Monday, August 21, 2017 around 5 pm.

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.

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