Valhi (NYSE:VHI) and Chemours (NYSE:CC) Critical Analysis

Chemours (NYSE:CC) and Valhi (NYSE:VHI) are both materials companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, risk, profitability, dividends and earnings.

Profitability

This table compares Chemours and Valhi’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chemours	-5.00%	60.64%	1.48%
Valhi	-2.36%	-2.77%	-1.45%

Valuation and Earnings

This table compares Chemours and Valhi”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chemours	$5.81 billion	0.35	-$386.00 million	($1.91)	-7.11
Valhi	$2.08 billion	0.21	-$57.60 million	($1.79)	-8.67

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

Dividends

Chemours pays an annual dividend of $0.35 per share and has a dividend yield of 2.6%. Valhi pays an annual dividend of $0.32 per share and has a dividend yield of 2.1%. Chemours pays out -18.3% of its earnings in the form of a dividend. Valhi pays out -17.9% 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. Chemours is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Chemours has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, Valhi has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Chemours and Valhi, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chemours	1	6	5	0	2.33
Valhi	1	0	0	0	1.00

Chemours currently has a consensus target price of $19.70, suggesting a potential upside of 44.99%. Given Chemours’ stronger consensus rating and higher possible upside, analysts plainly believe Chemours is more favorable than Valhi.

Insider and Institutional Ownership

76.3% of Chemours shares are owned by institutional investors. Comparatively, 3.8% of Valhi shares are owned by institutional investors. 0.9% of Chemours shares are owned by company insiders. Comparatively, 0.2% of Valhi shares are owned by company 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.

Summary

Chemours beats Valhi on 13 of the 16 factors compared between the two stocks.

About Chemours

The Chemours Company provides performance chemicals in North America, the Asia Pacific, Europe, the Middle East, Africa, and Latin America. It operates through three segments: Titanium Technologies, Thermal & Specialized Solutions, and Advanced Performance Materials. The Titanium Technologies segment provides TiO2 pigment under the Ti-Pure brand for delivering whiteness, brightness, opacity, durability, efficiency, and protection in various of applications, such as architectural and industrial coatings, flexible and rigid plastic packaging, polyvinylchloride, laminate papers used for furniture and building materials, coated paper, and coated paperboard used for packaging. The Thermal & Specialized Solutions segment offers of refrigerants, thermal management solutions, propellants, foam blowing agents, and specialty solvents. The Advanced Performance Materials segment products portfolio includes various industrial resins, specialty products, membranes, and coatings for electronics, communications, transportation, wire and cable, energy, oil and gas, and medical, and other applications under the eflon, Viton, Krytox, and Nafion brands. The company sells its products through direct and indirect channels, as well as through a network of resellers and distributors. The Chemours Company was incorporated in 2014 and is headquartered in Wilmington, Delaware.

About Valhi

Valhi, Inc. engages in the chemicals, component products, and real estate management and development businesses in Europe, North America, the Asia Pacific, and internationally. The company’s Chemicals segment produces and markets titanium dioxide pigments (TiO2), which are white inorganic pigments used in various applications by paint, plastics, decorative laminate, and paper manufacturers. It offers TiO2 under the KRONOS name through agents and distributors. The company’s Component Products segment manufactures mechanical and electrical cabinet locks, and other locking mechanisms for use in ignition systems, mailboxes, file cabinets, desk drawers, tool storage cabinets, vending and cash containment machines, integrated inventory and access control secured narcotics boxes, medical cabinetry security, electronic circuit panels, storage compartments, and gas station security applications. It also provides stainless steel exhaust components, gauges, throttle controls, wake enhancement systems, trim tabs, and related hardware and accessories primarily for performance and ski/wakeboard boats. The company’s Real Estate Management and Development segment offers utility services to industrial and municipal customers; owns real properties; and develops land holdings for commercial, industrial, and residential purposes. It also holds marketable securities and other investments. The company was incorporated in 1932 and is based in Dallas, Texas. Valhi, Inc. is a subsidiary of Dixie Rice Agricultural L.L.C.