Scotiabank raised the target on Onex Corp. to $107 from $102, and maintained the Outperform rating on the stock.
Our view of the stock is Neutral with a score of 4.7 out of 10, where 0 is very bearish and 10 very bullish.
What to like:
High market capitalization This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable. Underpriced compared to book value The stock is trading low compared to its peers on a price to book value basis and is in the top quartile. It may be underpriced but do check its financial performance to make sure there is no specific reason. Superior capital utilization The company management has delivered better return on invested capital in the most recent 4 quarters than its peers, placing it in the top quartile. Low debt The company is less leveraged than its peers ,, and is among the top quartile, which makes it more flexible. However, do check the news and look at its sector. Sometimes this is low because the company is not growing and has no growth potential. Positive cash flow The company had positive total cash flow in the most recent four quarters. Positive free cash flow The company had positive total free cash flow in the most recent four quarters. Superior Earnings Growth This stock has shown top quartile earnings growth in the previous 5 years compared to its sector.
What to not like:
Poor risk adjusted returns This company is delivering below median risk adjusted returns in its peers. Even if it is outperforming on returns , the returns are unpredictable. Proceed with caution. Below median total returns The company has under performed its peers on annual average total returns in the past 5 years. Below median dividend returns The company’s average income yield over the past 5 years has been low compared to its peers. However, it is not a problem if you are not looking for income. Overpriced compared to earnings The stock is trading high compared to its peers on a price to earning basis and is above the sector median. Overpriced on cashflow basis The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy. Poor return on equity The company management has delivered below median return on equity in the most recent 4 quarters compared to its peers. Poor return on assets The company management has delivered below median return on assets in the most recent 4 quarters compared to its peers. Low Revenue Growth This stock has shown below median revenue growth in the previous 5 years compared to its sector.
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