Financial Survey: Valhi (NYSE:VHI) versus LyondellBasell Industries (NYSE:LYB)

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

Dividends

Valhi pays an annual dividend of $0.32 per share and has a dividend yield of 1.8%. LyondellBasell Industries pays an annual dividend of $5.48 per share and has a dividend yield of 8.7%. Valhi pays out 7.8% of its earnings in the form of a dividend. LyondellBasell Industries pays out 169.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. LyondellBasell Industries has increased its dividend for 14 consecutive years. LyondellBasell Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

3.8% of Valhi shares are owned by institutional investors. Comparatively, 71.2% of LyondellBasell Industries shares are owned by institutional investors. 0.1% of Valhi shares are owned by insiders. Comparatively, 0.1% of LyondellBasell Industries shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Valhi and LyondellBasell Industries”s 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	4.31
LyondellBasell Industries	$40.30 billion	0.50	$1.37 billion	$3.24	19.51

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Valhi and LyondellBasell Industries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valhi	1	0	0	0	1.00
LyondellBasell Industries	2	10	2	1	2.13

Valhi presently has a consensus target price of $12.00, indicating a potential downside of 32.07%. LyondellBasell Industries has a consensus target price of $66.00, indicating a potential upside of 4.41%. Given LyondellBasell Industries’ stronger consensus rating and higher possible upside, analysts plainly believe LyondellBasell Industries is more favorable than Valhi.

Profitability

This table compares Valhi and LyondellBasell Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Valhi	5.54%	8.60%	4.31%
LyondellBasell Industries	2.81%	13.19%	4.71%

Risk & Volatility

Valhi has a beta of 1.29, meaning that its share price is 29% more volatile than the S&P 500. Comparatively, LyondellBasell Industries has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500.

Summary

LyondellBasell Industries beats Valhi on 14 of the 18 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 LyondellBasell Industries

LyondellBasell Industries N.V. operates as a chemical company in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally. The company operates in six segments: Olefins and PolyolefinsAmericas; Olefins and PolyolefinsEurope, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology. It produces and markets olefins and co-products, polyethylene, and polypropylene; and propylene oxide and derivatives; oxyfuels and related products; and intermediate chemicals, such as styrene monomer, acetyls, ethylene oxide, and ethylene glycol. In addition, the company produce and markets compounding and solutions including polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders, and advanced polymers including catalloy and polybutene-1; and refines heavy, high-sulfur crude oil and other crude oils, as well as refined products, including gasoline and distillates. Further, it develops and licenses chemical and polyolefin process technologies; manufactures and sells polyolefin catalysts; and serves food packaging, home furnishings, automotive components, and paints and coatings applications. LyondellBasell Industries N.V. was incorporated in 2009 and is headquartered in Houston, Texas.