Head-To-Head Survey: ONEX (OTCMKTS:ONEXF) versus Ares Management (NYSE:ARES)

ONEX (OTCMKTS:ONEXF) and Ares Management (NYSE:ARES) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, risk, profitability and earnings.

Dividends

ONEX pays an annual dividend of $0.29 per share and has a dividend yield of 0.4%. Ares Management pays an annual dividend of $5.40 per share and has a dividend yield of 4.8%. ONEX pays out 3.3% of its earnings in the form of a dividend. Ares Management pays out 319.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ares Management has increased its dividend for 7 consecutive years. Ares Management is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares ONEX and Ares Management”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ONEX	$899.00 million	6.06	$617.00 million	$8.87	8.95
Ares Management	$5.60 billion	6.63	$527.36 million	$1.69	66.66

ONEX has higher earnings, but lower revenue than Ares Management. ONEX is trading at a lower price-to-earnings ratio than Ares Management, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

ONEX has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500. Comparatively, Ares Management has a beta of 1.52, indicating that its stock price is 52% more volatile than the S&P 500.

Institutional & Insider Ownership

0.7% of ONEX shares are held by institutional investors. Comparatively, 50.0% of Ares Management shares are held by institutional investors. 0.5% of Ares Management shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for ONEX and Ares Management, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ONEX	0	1	2	0	2.67
Ares Management	1	4	12	1	2.72

Ares Management has a consensus price target of $168.73, indicating a potential upside of 49.79%. Given Ares Management’s stronger consensus rating and higher possible upside, analysts plainly believe Ares Management is more favorable than ONEX.

Profitability

This table compares ONEX and Ares Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ONEX	68.63%	7.16%	4.75%
Ares Management	9.41%	19.04%	4.83%

Summary

Ares Management beats ONEX on 14 of the 18 factors compared between the two stocks.

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.

About Ares Management

Ares Management Corporation operates as an alternative asset manager in the United States, Europe, and Asia. The company's Tradable Credit Group segment manages various types of investment funds, such as commingled and separately managed accounts for institutional investors, and publicly traded vehicles and sub-advised funds for retail investors in the tradable and non-investment grade corporate credit markets. Its Direct Lending Group segment provides financing solutions to small-to-medium sized companies. The company's Private Equity Group segment focuses on majority or shared-control investments primarily in under-capitalized companies. Its Real Estate Group segment invests in new developments and the repositioning of assets, with a focus on control or majority-control investments; and originates and invests in a range of self-originated financing opportunities for middle-market owners and operators of commercial real estate. The firm was previously known as Ares Management, L.P. Ares Management Corporation was founded in 1997 and is headquartered in Los Angeles, California with additional offices in the United States, Europe and Asia. Ares Management GP LLC is the general partner of the company.