Head to Head Comparison: Valhi (NYSE:VHI) & Olin (NYSE:OLN)

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

Risk & Volatility

Olin has a beta of 1.64, suggesting that its stock price is 64% more volatile than the S&P 500. Comparatively, Valhi has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Insider & Institutional Ownership

88.7% of Olin shares are owned by institutional investors. Comparatively, 3.8% of Valhi shares are owned by institutional investors. 1.7% of Olin shares are owned by insiders. Comparatively, 0.1% of Valhi shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Olin pays an annual dividend of $0.80 per share and has a dividend yield of 3.1%. Valhi pays an annual dividend of $0.32 per share and has a dividend yield of 2.0%. Olin pays out -210.5% 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. Olin is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Olin	-0.63%	-0.47%	-0.12%
Valhi	0.89%	2.22%	1.13%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Olin and Valhi, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Olin	3	12	2	1	2.06
Valhi	2	0	0	0	1.00

Olin currently has a consensus target price of $23.07, indicating a potential downside of 11.38%. Valhi has a consensus target price of $12.00, indicating a potential downside of 25.35%. Given Olin’s stronger consensus rating and higher probable upside, analysts clearly believe Olin is more favorable than Valhi.

Valuation & Earnings

This table compares Olin 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
Olin	$6.78 billion	0.44	-$42.80 million	($0.38)	-68.50
Valhi	$2.10 billion	0.22	$108.00 million	$0.64	25.12

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

Summary

Olin beats Valhi on 11 of the 17 factors compared between the two stocks.

About Olin

Olin Corporation manufactures and distributes chemical products in the United States, Europe, Asia Pacific, Latin America, and Canada. It operates through three segments: Chlor Alkali Products and Vinyls; Epoxy; and Winchester. The Chlor Alkali Products and Vinyls segment offers chlorine and caustic soda, ethylene dichloride and vinyl chloride monomers, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products, potassium hydroxide, and chlorinated organics intermediates and solvents. The Epoxy segment provides Allylics, such as allyl chloride, epichlorohydrin, and glycerin; aromatics, including acetone, bisphenol, cumene, and phenol; liquid and solid epoxy resins; and converted epoxy resins and additives. The Winchester segment offers sporting ammunition products, including shotshells, small caliber centerfire, and rimfire ammunition products for hunters and recreational shooters, and law enforcement agencies; small caliber military ammunition products for use in infantry and mounted weapons; and industrial products comprising gauge loads and powder-actuated tool loads for maintenance applications in power and concrete industries, and powder-actuated tools in construction industry. The company markets its products through its sales force, as well as directly to various industrial customers, mass merchants, retailers, wholesalers, gun clubs, other distributors, and the U.S. Government and its prime contractors. Olin Corporation was incorporated in 1892 and is based in Clayton, Missouri.

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.