Comparing Portman Ridge Finance (NASDAQ:PTMN) and ONEX (OTCMKTS:ONEXF)

ONEX (OTCMKTS:ONEXF) and Portman Ridge Finance (NASDAQ:PTMN) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, institutional ownership, dividends, risk, earnings, analyst recommendations and profitability.

Risk and Volatility

ONEX has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, Portman Ridge Finance has a beta of 0.6, meaning that its stock price is 40% less volatile than the S&P 500.

Insider & Institutional Ownership

0.7% of ONEX shares are owned by institutional investors. Comparatively, 30.1% of Portman Ridge Finance shares are owned by institutional investors. 2.1% of Portman Ridge Finance shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares ONEX and Portman Ridge Finance”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ONEX	$649.00 million	8.76	$303.00 million	$7.32	11.32
Portman Ridge Finance	-$2.85 million	-58.52	-$5.93 million	($0.93)	-13.57

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

Analyst Ratings

This is a summary of recent ratings for ONEX and Portman Ridge Finance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ONEX	0	1	2	0	2.67
Portman Ridge Finance	0	1	0	0	2.00

Portman Ridge Finance has a consensus target price of $14.00, indicating a potential upside of 10.94%. Given Portman Ridge Finance’s higher probable upside, analysts clearly believe Portman Ridge Finance is more favorable than ONEX.

Profitability

This table compares ONEX and Portman Ridge Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ONEX	61.92%	6.12%	3.85%
Portman Ridge Finance	-15.92%	11.49%	4.54%

Dividends

ONEX pays an annual dividend of $0.29 per share and has a dividend yield of 0.3%. Portman Ridge Finance pays an annual dividend of $1.88 per share and has a dividend yield of 14.9%. ONEX pays out 4.0% of its earnings in the form of a dividend. Portman Ridge Finance pays out -202.2% 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. Portman Ridge Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

ONEX beats Portman Ridge Finance on 9 of the 16 factors compared between the two stocks.

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.

About Portman Ridge Finance

Portman Ridge Finance Corporation is a business development company specializing in investments in unitranche loans (including last out), first lien loans, second lien loans, subordinated debt, equity co-investment, mezzanine, buyout in middle market companies. It also makes acquisitions in businesses complementary to the firm's business. It primarily invests in healthcare, cargo transport, manufacturing, industrial & environmental services, logistics & distribution, media & telecommunications, real estate, education, automotive, agriculture, aerospace/defense, packaging, electronics, finance, non-durable consumer, consumer products, business services, utilities, insurance, and food and beverage sectors. The fund typically invests $1 million to $20 million in its portfolio companies. It provides senior secured term loans from $2 million to $20 million maturing in five to seven years; second lien term loans from $5 million to $15 million maturing in six to eight years; senior unsecured loans $5 million to $23 million maturing in six to eight years; mezzanine loans from $5 million to $15 million maturing in seven to ten years; and equity investments from $1 to $5 million. The fund targets the companies with EBITDA between $5 million and $25 million. While investing in debt securities, it invests in those middle market firms with EBITDA between $10 million and $50 million and/or total debt between $25 million and $150 million. It invests in minority, and majority or control equity positions alongside its private equity sponsor partners.