Comparing ONEX (OTCMKTS:ONEXF) & Federated Hermes (NYSE:FHI)

Federated Hermes (NYSE:FHI) and ONEX (OTCMKTS:ONEXF) are both mid-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Dividends

Federated Hermes pays an annual dividend of $1.36 per share and has a dividend yield of 2.4%. ONEX pays an annual dividend of $0.29 per share and has a dividend yield of 0.4%. Federated Hermes pays out 26.5% of its earnings in the form of a dividend. ONEX pays out 3.3% 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. Federated Hermes has increased its dividend for 4 consecutive years. Federated Hermes is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Federated Hermes and ONEX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Federated Hermes	22.40%	34.25%	18.29%
ONEX	68.63%	7.21%	4.58%

Analyst Ratings

This is a summary of current recommendations for Federated Hermes and ONEX, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Federated Hermes	0	5	2	0	2.29
ONEX	0	1	2	0	2.67

Federated Hermes presently has a consensus target price of $55.00, suggesting a potential downside of 1.50%. Given Federated Hermes’ higher possible upside, research analysts clearly believe Federated Hermes is more favorable than ONEX.

Institutional & Insider Ownership

75.9% of Federated Hermes shares are held by institutional investors. Comparatively, 0.7% of ONEX shares are held by institutional investors. 3.8% of Federated Hermes shares are held 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.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Federated Hermes	$1.80 billion	2.40	$403.30 million	$5.14	10.86
ONEX	$899.00 million	5.80	$617.00 million	$8.87	8.56

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

Volatility & Risk

Federated Hermes has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, ONEX has a beta of 1.24, indicating that its stock price is 24% more volatile than the S&P 500.

Summary

Federated Hermes beats ONEX on 9 of the 16 factors compared between the two stocks.

About Federated Hermes

Federated Hermes, Inc. is a publicly owned investment manager. Through its subsidiaries, the firm provides its services to individuals, including high net worth individuals, banking or thrift institutions, investment companies, pension and profit sharing plans, pooled investment vehicles, charitable organizations, state or municipal government entities, and registered investment advisors. Through its subsidiaries, it manages separate client-focused equity, fixed income, balanced and money market mutual funds along with separate client-focused equity, fixed income, money market, and balanced portfolios. Through its subsidiaries, the firm invests in the public equity and fixed income markets across the globe. It invests in growth and value stocks of small-cap, mid-cap, and large-cap companies. The firm makes its fixed income investments in ultra-short, short-term, and intermediate-term mortgage-backed, U.S. Government, U.S. corporate, high yield, and municipal securities. It employs both fundamental and quantitative analysis to make its equity investments. Federated Hermes, Inc. was founded in 1955 and is based in Pittsburgh, Pennsylvania with additional offices in New York City and London, United Kingdom.

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.