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Wondering whether Onex is a hidden bargain or an overhyped story? Let’s dive right in and see what the numbers (and the market) might be signaling.
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Despite a slight dip of 0.7% over the past week, Onex’s stock is still up 8.6% year-to-date and has delivered an impressive 20.5% gain over the past year. This is plenty to pique curiosity about what’s driving the momentum.
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Recent headlines have spotlighted Onex’s continued activity in the private equity space and notable moves in portfolio management, setting the stage for speculation about future deals. These developments fuel excitement and a measure of caution as investors weigh where the company might head next.
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Onex currently scores 2 out of 6 on our valuation checks, meaning it’s undervalued in only two metrics so far. Next, we’ll break down what traditional valuation methods suggest. We will then reveal an even more insightful way to assess value further in the article.
Onex scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Excess Returns model estimates a company’s intrinsic value by focusing on how effectively it generates returns over its cost of equity. This approach examines the relationship between return on invested capital and the company’s book value, offering insight into whether Onex consistently adds value above what shareholders require as compensation for risk.
For Onex, the model considers a Book Value of CA$125.16 per share and a Stable EPS of CA$6.86 per share, based on the median Return on Equity from the past five years. The company’s cost of equity stands at CA$9.61 per share, which results in an excess return of CA$-2.75 per share. Onex has maintained an average Return on Equity of 6.20% over the past five years, while its Stable Book Value is CA$110.65 per share.
Based on these fundamentals, the Excess Returns analysis suggests that Onex does not currently create value above its cost of equity. With the model indicating the stock is trading at a 32.9% premium to its estimated intrinsic value, Onex appears to be overvalued at present levels.
Result: OVERVALUED
Our Excess Returns analysis suggests Onex may be overvalued by 32.9%. Discover 845 undervalued stocks or create your own screener to find better value opportunities.
The Price-to-Earnings (PE) ratio is widely used to assess the value of profitable companies like Onex, as it allows investors to compare the company’s current share price to its underlying earnings power. This multiple is especially informative when a business consistently generates profits, making it a relevant gauge for Onex’s valuation.
