Analyzing ONEX (OTCMKTS:ONEXF) and Palmer Square Capital BDC (NYSE:PSBD)

Palmer Square Capital BDC (NYSE:PSBD) and ONEX (OTCMKTS:ONEXF) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, risk, earnings, analyst recommendations, institutional ownership and valuation.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Palmer Square Capital BDC and ONEX, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Palmer Square Capital BDC	0	5	0	0	2.00
ONEX	0	1	2	0	2.67

Palmer Square Capital BDC presently has a consensus target price of $10.50, indicating a potential upside of 6.22%. Given Palmer Square Capital BDC’s higher possible upside, analysts plainly believe Palmer Square Capital BDC is more favorable than ONEX.

Profitability

This table compares Palmer Square Capital BDC and ONEX’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Palmer Square Capital BDC	-18.27%	11.33%	4.13%
ONEX	63.83%	5.24%	4.21%

Dividends

Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 14.6%. ONEX pays an annual dividend of $0.28 per share and has a dividend yield of 0.4%. Palmer Square Capital BDC pays out -228.6% of its earnings in the form of a dividend. ONEX pays out 4.2% 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. Palmer Square Capital BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

6.5% of Palmer Square Capital BDC shares are held by institutional investors. Comparatively, 0.7% of ONEX shares are held by institutional investors. 1.1% of Palmer Square Capital BDC shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Palmer Square Capital BDC has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, ONEX has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.

Earnings & Valuation

This table compares Palmer Square Capital BDC and ONEX”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Palmer Square Capital BDC	$124.39 million	2.40	-$3.17 million	($0.63)	-15.69
ONEX	$899.00 million	6.54	$617.00 million	$6.68	11.54

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

Summary

ONEX beats Palmer Square Capital BDC on 10 of the 16 factors compared between the two stocks.

About Palmer Square Capital BDC

Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.

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.