I do not own this stock of Onex Corp (TSX-ONEX, OTC-ONEXF) but I used to. 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 in as it was really not a dividend paying stock as the dividends never changed, so I sold.
When I was updating my spreadsheet, I noticed that all the earnings came from discontinued operations. There was a loss from continuing operations. They started to increase the dividends in 2017, but they are still under 1% yield, so really not a dividend paying stock. Few analysts follow it.
This is not really a dividend paying stock. The dividend was flat from 1997 to 2013. Also, the dividend yield has mostly been below 1%. I would not buy a stock with a yield below 1%. (It takes too long for compounding to get you to a good yield.) Some very low yield stock I have waited until the dividend yield is above 1% to buy because of the dividend increases.
They started to raise the dividends in 2014 and the increases have been good. The 5 year dividend growth is 21.19%. This is the only one that counts as dividend increases have only been going on for less than 5 years.
I do not think that they can afford the dividends because of very low EPS. The 5 year coverage looks very good at 6.8% but the 5 year median is a negative 4.4%. On the other hand, the Dividend Payout Ratio for CFPS is really low at 1.21% for 2017 and a 5 year coverage at 0.96. So in this sense, coverage is not a problem.
The Long Term Debt/Market Cap Ratio is 2.95. This means that that long term debt is almost 3 times the value of the stock. This is a concern. I would feel better about this long term debt if they had cash and long term assets to cover the long term debt. Currently that coverage is just 75%.
The Debt Ratio is low at just 1.13 for 2017, but this is not unusual for a Financial Services Sector stock. The Liquidity Ratio is good at 1.59 with 5 year coverage at 1.56. The Leverage and Debt/Equity Ratios are a bit high but here again not unusual for a Financial Services Sector stock at 8.91 and 7.91 respectively.
The Total Return per year is show below for years shown below. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
This first chart is in CDN$ and covers years 5 to 25. Shareholders have done well as far as Total Return goes.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 21.19% | 17.46% | 17.10% | 0.36% |
| 10 | 10.08% | 10.46% | 10.17% | 0.28% |
| 15 | 6.61% | 12.78% | 12.38% | 0.40% |
| 20 | 4.92% | 14.28% | 13.64% | 0.64% |
| 25 | 4.31% | 18.33% | 16.65% | 1.67% |
This second chart is in US$ and the Total Return, Capital Gains and Dividends, it covers years 5 to 16. Except for the 10 year return, the total return is good.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 15.69% | 11.96% | 11.64% | 0.32% |
| 10 | 7.49% | 7.67% | 7.40% | 0.27% |
| 15 | 8.27% | 14.46% | 13.97% | 0.49% |
| 20, 16 | 5.61% | 11.21% | 10.82% | 0.39% |
| 25 | 4.37% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are -12.55, -15.01 and -17.48. The corresponding 10 year ratios are -10.66, -12.86 and -16.26. The corresponding historical ratios are 2.75, 3.32 and 3.88. These are all in CDN$ terms. The current P/E Ratio is 127.79 based on a stock price of $97.19 CDN$ and 2018 EPS estimate of $0.79 CDN$ ($0.58 US$). It is impossible to do any testing using P/E Ratios because of the historical lack of earnings.
I get a Graham Price of $22.92 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 0.53, 0.68 and 0.60 CDN$. The current P/GP Ratio is 4.24 based on a stock price of $97.19 CDN$. This stock price testing suggests that the stock price is relatively expensive. However, this is probably not a good test because of the past history of earning losses.
I get a 10 year median Price/Book Value per Share Ratio of 2.14 US$. The current P/B Ratio is 3.15 US$ based on Book Value of $2,362M US$, Book Value per Share of $23.41 US$ and a stock price of $73.81 US$. The current P/B Ratio is some 48% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 0.52% CDN$. The current dividend yield is 0.36% CDN$ based on dividends of $0.35 CDN$ and a stock price of $79.19 CDN$. The current dividend yield is some 31% below the historical one. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.18 US$. The current P/S Ratio is 0.30 US$ based on last 12 month revenue of $25,100 US$, Revenue per Share of $248.81 US$ and a stock price of $73.81 US$. The current ratio is some 66% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive.
When I look at analysts’ recommendations I find Strong Buy (1), Buy (3) and Hold (2). The consensus would be a Buy. The 12 month stock price is $105.42 CDN$. This implies a total return of 8.83% with 8.47% from capital gains and 0.36% from dividends.
Onex announces their investment in Power School Group on Global News Wire. Onex reports on 2 quarter results on Global News Wire. Mat Litalien on Motley Fool like the dividend growth of this stock. See what analysts are saying about this stock on Stock Chase. Mostly the analysts like this company.
Onex Corp is a private equity investor and asset management firm. The company invests in businesses in partnership with management teams. It also invests in non-investment-grade debt through credit funds and collateralized loan obligations. 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 20, 2018 around 5 pm.
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