Head-To-Head Review: Tokuyama (OTCMKTS:TKYMY) versus Valhi (NYSE:VHI)

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

Dividends

Tokuyama pays an annual dividend of $0.13 per share and has a dividend yield of 0.9%. Valhi pays an annual dividend of $0.32 per share and has a dividend yield of 2.2%. Tokuyama pays out 12.6% of its earnings in the form of a dividend. Valhi pays out -12.6% 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. Valhi is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Tokuyama has a beta of 0.21, indicating that its share price is 79% less volatile than the S&P 500. Comparatively, Valhi has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Tokuyama	6.39%	8.20%	4.47%
Valhi	-3.45%	-4.29%	-2.23%

Earnings and Valuation

This table compares Tokuyama and Valhi”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tokuyama	$2.32 billion	0.87	$147.51 million	$1.03	13.59
Valhi	$2.08 billion	0.20	-$57.60 million	($2.54)	-5.81

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

Analyst Recommendations

This is a summary of recent ratings for Tokuyama and Valhi, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tokuyama	0	0	0	0	0.00
Valhi	1	0	0	0	1.00

Insider and Institutional Ownership

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

Summary

Tokuyama beats Valhi on 8 of the 14 factors compared between the two stocks.

About Tokuyama

Tokuyama Corporation produces and sells various chemical products in Japan. The company operates through six segments: Chemicals, Cement, Electronics and Advanced Materials, Life Science, Eco Business, and Others. The Chemicals segment offers caustic soda, soda ash, calcium chloride, sodium silicate cullet, sodium bicarbonate, purified, vinyl chloride monomer, polyvinyl chloride resin, propylene oxide, methylene chloride, and chloroform. The Cement segment provides cement, ready-mixed concrete, and cement-type stabilizer, as well as engages in the resource recycling business. The Electronic and Advanced Materials segment provides polycrystalline silicon; fumed silica and tetrachlorosilane; aluminum nitride; high-purity chemicals for electronics manufacturing and photoresist developer; and isopropyl alcohol. The Life Science segment provides medical diagnosis systems, dental materials and equipment, pharmaceutical ingredients and intermediates, plastic lens-related materials for glasses, and microporous film. The Eco Business segment offers plastic window sashes, ion exchange membranes, as well as engages in waste gypsum board recycling activity. The company was formerly known as Tokuyama Soda Co., Ltd. and changed its name to Tokuyama Corporation in April 1994. Tokuyama Corporation was incorporated in 1918 and is headquartered in Tokyo, Japan.

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.