Analyzing Valhi (NYSE:VHI) and Johnson Matthey (OTCMKTS:JMPLY)

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Valhi and Johnson Matthey, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valhi	2	0	0	0	1.00
Johnson Matthey	0	3	1	2	2.83

Valhi currently has a consensus target price of $12.00, indicating a potential downside of 14.01%. Given Valhi’s higher probable upside, equities research analysts plainly believe Valhi is more favorable than Johnson Matthey.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Valhi	$2.08 billion	0.19	-$57.60 million	($2.02)	-6.91
Johnson Matthey	$14.89 billion	0.28	$475.91 million	N/A	N/A

Johnson Matthey has higher revenue and earnings than Valhi.

Dividends

Valhi pays an annual dividend of $0.32 per share and has a dividend yield of 2.3%. Johnson Matthey pays an annual dividend of $1.16 per share and has a dividend yield of 2.3%. Valhi pays out -15.8% of its earnings in the form of a dividend.

Insider & Institutional Ownership

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

Volatility & Risk

Valhi has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500. Comparatively, Johnson Matthey has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Valhi	-2.77%	-3.20%	-1.65%
Johnson Matthey	N/A	N/A	N/A

Summary

Johnson Matthey beats Valhi on 10 of the 15 factors compared between the two stocks.

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.

About Johnson Matthey

Johnson Matthey is a global leader in science that enables a cleaner and healthier world. With over 200 years of sustained commitment to innovation and technological breakthroughs, they improve the function, performance and safety of their customers’ products. Their science has a global impact in areas such as low emission transport, pharmaceuticals, chemical processing and making the most efficient use of the planet’s natural resources. Today more than 13,000 Johnson Matthey professionals collaborate with their network of customers and partners to make a real difference to the world around us.