Financial Review: Secom (OTCMKTS:SOMLY) and Onex (OTCMKTS:ONEXF)

Secom (OTCMKTS:SOMLY) and Onex (OTCMKTS:ONEXF) are both business services companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

Earnings and Valuation

This table compares Secom and Onex’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Secom	$8.00 billion	1.80	$706.22 million	$0.84	18.32
Onex	$1.13 billion	4.87	$529.00 million	$9.80	7.22

Secom has higher revenue and earnings than Onex. Onex is trading at a lower price-to-earnings ratio than Secom, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

0.7% of Onex shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Secom and Onex’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Secom	8.85%	7.55%	5.08%
Onex	66.29%	9.34%	6.10%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Secom and Onex, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Secom	0	0	0	0	N/A
Onex	0	0	0	0	N/A

Onex has a consensus target price of $96.00, indicating a potential upside of 35.63%. Given Onex’s higher probable upside, analysts clearly believe Onex is more favorable than Secom.

Volatility and Risk

Secom has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500. Comparatively, Onex has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500.

Dividends

Secom pays an annual dividend of $0.10 per share and has a dividend yield of 0.6%. Onex pays an annual dividend of $0.30 per share and has a dividend yield of 0.4%. Secom pays out 11.9% of its earnings in the form of a dividend. Onex pays out 3.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Onex beats Secom on 9 of the 13 factors compared between the two stocks.

About Secom

SECOM CO., LTD., together with its subsidiaries, provides security services in Japan and internationally. The company operates through Security Services, Fire Protection Services, Medical Services, Insurance Services, Geospatial Information Services, BPO and ICT Services, and Other Services. The Security Services segment offers static guard, armored car, merchandise, and other services, as well as online security systems. The Fire Protection Services segment provides fire alarm systems, fire extinguishing systems, and maintenance services to office buildings, production facilities, tunnels, cultural properties, ships, and residences. The Medical Services segment offers home nursing, pharmaceutical dispensing, home delivery services, health and preventative care services, and personal and outpatient care services; and cloud-based medical reporting services and SECOM LINKus application. This segment also operates the general hospital and residences for seniors; and sells medical equipment and pharmaceuticals. The Insurance Services Segment provides fire insurance, automobile insurance, and cancer treatment insurance services. The Geospatial Information Services segment offers geospatial information services to public-sector entities, such as national and local governments; private sector customers; and overseas government agencies. The BPO and ICT Services segment provides contact centers and back office support services, data center, disaster preparedness, information security, and cloud-based services, as well as SaaS solutions. The Other Services segment offers real estate leasing, construction, and installation services. The company was incorporated in 1962 and is headquartered in Tokyo, Japan.

About Onex

Onex Corporation is a private equity firm specializing in acquisitions and platform acquisitions. The firm makes investments in buyouts, large- middle market, large-cap, mid-cap, and small-cap market and distressed companies. It also invests in recapitalization, growth capital, corporate carve-outs of subsidiaries and mission-critical supply divisions from multinational corporations, operational restructurings of undervalued businesses, and builds up. The firm seeks to invest in technology, electronics manufacturing services, industrial, aerospace, healthcare, retail, restaurants, industrials products, customer care services, metal services, building products, entertainment, gaming, cabinetry products, commercial vehicles, commercial and investment banking, financial services, commercial and multi-unit residential real estate. It invests in global businesses headquartered in North America, including United States and Canada, or Europe. The firm seeks to invest between $125 million and $1 billion in companies that have minimum revenues of $300 million. It does not consider size if the company is in an industry in which the firm already has presence. The firm seeks to make direct as well as co-investments through managed private equity, real estate and credit funds. It seeks to acquire a control position in its portfolio companies. Onex Corporation was founded in 1984 and is based in Toronto, Canada with additional offices in New York, New York; Englewood Cliffs, New Jersey; Boston, Massachusetts and London, United Kingdom.