Contrasting Valhi (NYSE:VHI) and Akzo Nobel (OTCMKTS:AKZOY)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Valhi	5.54%	8.60%	4.31%
Akzo Nobel	4.40%	13.14%	4.28%

Volatility & Risk

Valhi has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500. Comparatively, Akzo Nobel has a beta of 1.07, indicating that its share price is 7% more volatile than the S&P 500.

Insider and Institutional Ownership

3.8% of Valhi shares are held by institutional investors. Comparatively, 0.4% of Akzo Nobel shares are held by institutional investors. 0.2% of Valhi shares are held by company 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.

Earnings and Valuation

This table compares Valhi and Akzo Nobel”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Valhi	$2.10 billion	0.24	$108.00 million	$4.10	4.41
Akzo Nobel	$11.59 billion	1.05	$586.50 million	$0.98	24.18

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

Dividends

Valhi pays an annual dividend of $0.32 per share and has a dividend yield of 1.8%. Akzo Nobel pays an annual dividend of $0.95 per share and has a dividend yield of 4.0%. Valhi pays out 7.8% of its earnings in the form of a dividend. Akzo Nobel pays out 96.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Valhi and Akzo Nobel, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valhi	1	0	0	0	1.00
Akzo Nobel	0	0	2	0	3.00

Valhi currently has a consensus target price of $12.00, suggesting a potential downside of 33.70%. Given Valhi’s higher probable upside, analysts plainly believe Valhi is more favorable than Akzo Nobel.

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 Akzo Nobel

Akzo Nobel N.V. engages in the production and sale of paints and coatings worldwide. The company operates through two segments: Decorative Paints and Performance Coatings. It offers decorative paints, including paints, lacquers, and varnishes; and a range of mixing machines and color concepts for the building and renovation industry, as well as specialty coatings. The company also provides performance coatings that protect and enhance ships, cars, aircraft, yachts, architectural components, consumer goods, and oil and gas facilities. It offers its products under AkzoNobel, Alabastine, Alba, Andercol, Apla, Armstead Trade, Astral, Astral Batiment, AwlGrip, Brikol, Dulux, Bruguer, Cetabever, Cetol, Chemcraft, Colourland Paints, CONSOLAN, Coral, Cromadex, Cuprinol, Dynacoat, Flexa, Glitsa, Grip-Gard, Herbol, Hammerite, International, Interlux, Innenweis, Interpon, Inca, Luxol, Levis, Lesonal, Molto, Modern Classikk, Maxilite, Mauvilac, Mason CT, Marshall, Mactra, Nordsjo, Oxirite, Protecto, Procolor, Polyfilla, Polycell, Pinotex, Pintuco, Resicoat, Relest, Sparlack, Sadolin, Sikkens, Sea Hawk, Savana, Salcomix, Trimetal, Titanlux, Taubmans, U-tech, Vpowdertech, Vivechrom, Xylazel, Xyladecor, Wanda, and Zweihorn brands. The company serves to energy, packaging, infrastructure, and shipbuilding and maintenance industries, as well as general industries, such as agricultural and construction equipment, construction-related steel, metal fabrication, pipes, appliances, and transportation. The company was formerly known as Akzo NV and changed its name to Akzo Nobel N.V. in 1994. Akzo Nobel N.V. was founded in 1646 and is headquartered in Amsterdam, the Netherlands.