Head to Head Analysis: Valhi (NYSE:VHI) and Albemarle (NYSE:ALB)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Albemarle	-0.43%	0.10%	0.05%
Valhi	0.89%	2.22%	1.13%

Dividends

Albemarle pays an annual dividend of $1.62 per share and has a dividend yield of 1.0%. Valhi pays an annual dividend of $0.32 per share and has a dividend yield of 2.5%. Albemarle pays out -101.9% of its earnings in the form of a dividend. Valhi pays out 50.0% 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. Albemarle has raised its dividend for 30 consecutive years.

Analyst Recommendations

This is a summary of current ratings and price targets for Albemarle and Valhi, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Albemarle	2	18	10	1	2.32
Valhi	2	0	0	0	1.00

Albemarle currently has a consensus price target of $125.28, indicating a potential downside of 22.44%. Valhi has a consensus price target of $12.00, indicating a potential downside of 5.22%. Given Valhi’s higher possible upside, analysts clearly believe Valhi is more favorable than Albemarle.

Insider & Institutional Ownership

92.9% of Albemarle shares are held by institutional investors. Comparatively, 3.8% of Valhi shares are held by institutional investors. 0.3% of Albemarle shares are held by insiders. Comparatively, 0.2% of Valhi shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Albemarle and Valhi”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Albemarle	$5.38 billion	3.54	-$1.18 billion	($1.59)	-101.58
Valhi	$2.10 billion	0.17	$108.00 million	$0.64	19.78

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

Risk & Volatility

Albemarle has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500. Comparatively, Valhi has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.

Summary

Albemarle beats Valhi on 10 of the 18 factors compared between the two stocks.

About Albemarle

Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments: Energy Storage, Specialties and Ketjen. The Energy Storage segment offers lithium compounds, including lithium carbonate, lithium hydroxide, and lithium chloride; technical services for the handling and use of reactive lithium products; and lithium-containing by-products recycling services. The Specialties segment provides bromine-based specialty chemicals, including elemental bromine, alkyl and inorganic bromides, brominated powdered activated carbon, and other bromine fine chemicals; lithium specialties, such as butyllithium and lithium aluminum hydride; develops and manufactures cesium products for the chemical and pharmaceutical industries; and zirconium, barium, and titanium products for pyrotechnical applications that include airbag initiators. The Ketjen segment offers clean fuels technologies (CFT), which is composed of hydroprocessing catalysts (HPC) together with isomerization and akylation catalysts; fluidized catalytic cracking (FCC) catalysts and additives; and performance catalyst solutions (PCS), which is composed of organometallics and curatives. The company serves the energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, and crop protection markets. Albemarle Corporation was founded in 1887 and is headquartered in Charlotte, North Carolina.

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.