Critical Survey: Great Elm Capital Group (NASDAQ:GECC) vs. ONEX (OTCMKTS:ONEXF)

Great Elm Capital Group (NASDAQ:GECC) and ONEX (OTCMKTS:ONEXF) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Institutional & Insider Ownership

38.8% of Great Elm Capital Group shares are owned by institutional investors. Comparatively, 0.7% of ONEX shares are owned by institutional investors. 8.7% of Great Elm Capital Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Great Elm Capital Group and ONEX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Great Elm Capital Group	-17.08%	10.97%	3.95%
ONEX	56.15%	5.11%	3.18%

Dividends

Great Elm Capital Group pays an annual dividend of $1.48 per share and has a dividend yield of 19.3%. ONEX pays an annual dividend of $0.29 per share and has a dividend yield of 0.4%. Great Elm Capital Group pays out -264.3% of its earnings in the form of a dividend. ONEX pays out 4.7% 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. Great Elm Capital Group has increased its dividend for 2 consecutive years. Great Elm Capital Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Great Elm Capital Group and ONEX”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Great Elm Capital Group	$178,000.00	603.96	$3.55 million	($0.56)	-13.71
ONEX	$649.00 million	8.23	$303.00 million	$6.21	12.53

ONEX has higher revenue and earnings than Great Elm Capital Group. Great Elm Capital Group is trading at a lower price-to-earnings ratio than ONEX, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Great Elm Capital Group has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, ONEX has a beta of 1.33, indicating that its share price is 33% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Great Elm Capital Group and ONEX, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Great Elm Capital Group	2	1	0	0	1.33
ONEX	0	1	2	0	2.67

Great Elm Capital Group currently has a consensus price target of $10.50, suggesting a potential upside of 36.72%. Given Great Elm Capital Group’s higher probable upside, research analysts plainly believe Great Elm Capital Group is more favorable than ONEX.

Summary

Great Elm Capital Group beats ONEX on 9 of the 17 factors compared between the two stocks.

About Great Elm Capital Group

Great Elm Capital Corp. is a business development company which specializes in loan and mezzanine, middle market investments. It invests in the debt instruments of middle market companies. The fund prefers to invest in media, commercial services and supplies, healthcare, telecommunication services, communications equipment. It typically makes equity investments between $3 million and $10 million in companies with revenues between $3 million and $75 million.

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.