Shin-Etsu Chemical (OTCMKTS:SHECY) vs. Valhi (NYSE:VHI) Financial Comparison

Shin-Etsu Chemical (OTCMKTS:SHECY) and Valhi (NYSE:VHI) are both basic materials companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, dividends, earnings, institutional ownership and valuation.

Analyst Ratings

This is a breakdown of recent ratings for Shin-Etsu Chemical and Valhi, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shin-Etsu Chemical	1	0	0	0	1.00
Valhi	1	0	0	0	1.00

Valhi has a consensus target price of $12.00, indicating a potential downside of 28.68%. Given Valhi’s higher possible upside, analysts clearly believe Valhi is more favorable than Shin-Etsu Chemical.

Risk and Volatility

Shin-Etsu Chemical has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500. Comparatively, Valhi has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

Profitability

This table compares Shin-Etsu Chemical and Valhi’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shin-Etsu Chemical	19.94%	10.90%	9.31%
Valhi	4.69%	7.02%	3.53%

Valuation & Earnings

This table compares Shin-Etsu Chemical 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
Shin-Etsu Chemical	$16.82 billion	3.56	$3.56 billion	$0.88	17.13
Valhi	$2.10 billion	0.23	$108.00 million	$3.43	4.91

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

Institutional & Insider Ownership

0.0% of Shin-Etsu Chemical shares are held by institutional investors. Comparatively, 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, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Shin-Etsu Chemical pays an annual dividend of $0.25 per share and has a dividend yield of 1.7%. Valhi pays an annual dividend of $0.32 per share and has a dividend yield of 1.9%. Shin-Etsu Chemical pays out 28.4% of its earnings in the form of a dividend. Valhi pays out 9.3% 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.

Summary

Shin-Etsu Chemical beats Valhi on 8 of the 14 factors compared between the two stocks.

About Shin-Etsu Chemical

Shin-Etsu Chemical Co., Ltd. provides infrastructure, electronics, and functional materials in Japan. It is also involved in processing and specialized related services. The company operates through Infrastructure Materials; Electronics Materials; Functional Materials; and Processing and Specialized Services segments. In addition, it offers cellulose derivatives, synthetic pheromones, aroma chemicals, dielectric and LED/ semiconductor materials, silanes, photoresists, chlorides, caustic soda, liquid fluoroelastomers, polyvinyl chloride and vinyl acetate resin, silicones, and silicones processed goods. Further, the company offers pellicles, photomask blanks, synthetic quartz/ quartz cloth, pyrolytic boron nitride, LIB anode material, and silicon metal. Additionally, it provides rare earth magnets, compound semiconductors, and oxide single crystals. The company was formerly known as Shin-Etsu Nitrogen Fertilizer Co., Ltd. and changed its name to Shin-Etsu Chemical Co., Ltd. in 1940. Shin-Etsu Chemical Co., Ltd. was incorporated in 1926 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.