Delving into the financial landscape, a direct comparison between ONEX (OTCMKTS:ONEXF) and Franklin Resources (NYSE:BEN) reveals distinct strengths and weaknesses, prompting the crucial question: which of these finance companies truly stands as the superior business for investors? This comprehensive financial analysis will dissect key metrics including institutional ownership, dividend performance, valuation, profitability, earnings, and market risk, offering a nuanced perspective on both entities.
A significant divergence lies in their institutional backing. While a mere 0.7% of ONEX shares are held by institutional investors, a substantial 47.6% of Franklin Resources shares are under institutional ownership, complemented by 22.9% held by insiders. Strong institutional ownership often signals confidence from major money managers, endowments, and hedge funds, suggesting a belief in a company’s long-term market outperformance.
From a profitability standpoint, Franklin Resources demonstrates a clear advantage with higher revenue and earnings compared to ONEX. However, the valuation picture presents a different angle; ONEX trades at a lower price-to-earnings ratio than Franklin Resources, potentially indicating a more affordable stock for those seeking value in their investment strategy.
Dividend performance is another critical area of comparison. ONEX offers an annual dividend of $0.29 per share, yielding 0.4%, and pays out 4.7% of its earnings. In contrast, Franklin Resources boasts an annual dividend of $1.28 per share with a robust 5.3% yield and an impressive track record of 45 consecutive years of dividend increases. Despite Franklin Resources’ higher payout ratio (188.2% of earnings), which raises questions about future sustainability, it remains the stronger dividend stock due to its yield and consistency.
Assessing market volatility, ONEX carries a beta of 1.35, suggesting its stock price is 35% more volatile than the S&P 500. Franklin Resources, with a beta of 1.46, exhibits even higher volatility, indicating its stock price is 46% more reactive to broader market movements. Investors considering these stocks should factor in their risk tolerance relative to such fluctuations.
Onex Corporation operates as a prominent private equity firm, specializing in acquisitions across various market segments including large-middle market, large-cap, mid-cap, and small-cap companies, alongside distressed businesses. Their investment strategy extends to recapitalizations, growth capital, corporate carve-outs, and operational restructurings, targeting sectors like technology, healthcare, industrials, and financial services globally, primarily in North America and Europe. The firm seeks control positions in its portfolio companies.
Franklin Resources, Inc. functions as a publicly owned asset management holding company, delivering diverse services to a broad client base that includes individuals, institutions, pension plans, trusts, and partnerships. Through its subsidiaries, it manages equity, fixed income, balanced, and multi-asset mutual funds, investing across public equity, fixed income, and alternative markets. Founded in 1947, Franklin Resources maintains a global presence with offices worldwide.
Ultimately, the choice between ONEX and Franklin Resources hinges on an investor’s specific objectives and risk appetite. While Franklin Resources boasts stronger institutional backing and superior earnings, ONEX presents a more attractive valuation and a more conservative dividend payout. Both entities contribute uniquely to the finance sector, making this an insightful financial comparison for any discerning portfolio.
