Valhi (NYSE:VHI) & Asahi Kasei (OTCMKTS:AHKSY) Head to Head Review

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

Volatility and Risk

Asahi Kasei has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, Valhi has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.

Insider & 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 endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Asahi Kasei and Valhi, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Asahi Kasei	0	2	0	0	2.00
Valhi	1	0	0	0	1.00

Dividends

Asahi Kasei pays an annual dividend of $0.33 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 2.2%. Asahi Kasei pays out 17.9% of its earnings in the form of a dividend. Valhi pays out -17.9% 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.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Asahi Kasei	$20.42 billion	0.67	$1.05 billion	$1.84	10.64
Valhi	$2.08 billion	0.20	-$57.60 million	($1.79)	-8.09

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Asahi Kasei	6.10%	8.58%	4.31%
Valhi	-2.36%	-2.77%	-1.45%

Summary

Asahi Kasei beats Valhi on 9 of the 14 factors compared between the two stocks.

About Asahi Kasei

Asahi Kasei Corporation manufactures and sells chemicals. It offers caustic soda, chemical fertilizers, nitric acid, ammonia, acrylonitrile, methyl methacrylate, styrene, adipic acid, hexamethylene diamine, AH salt, propionitrile, sodium cyanide, acetonitrile, methacrylonitrile, cyclohexyl methacrylate, polyethylenes, polyethylenes powder, PMMA resin, polystyrene, polybutadiene rubbers, styrene/butadiene rubbers, clear styrenic copolymer, styrenic thermoplastic elastomer, hydrogenated styrenic elastomers, membranes and systems, functional materials, foams, purging compound, polyisocyanates, polycarbonatediol, aluminum paste, latex, photopolymers and platemaking systems, films, cyclohexanol, cyclohexane, and cyclohexene. The company also offers lithium-ion battery and lead-acid battery separators, plastic optical fibers, artificial suede, nylon 66 filament, polyamide 66, polyacetal, polyphenyene ether, polypropylene compounds, 3D cubic knitted fabric, noise suppression sheets, audio devices, photosensitive polyimide/PBO precursor, latent hardeners, glass fabrics, specialty products, explosion-bonded metal clads, lining fabrics, cupro and stretch fibers, oil-water separators, cellulose nanobeads, and flame-resistant and synthetic fiber; magnetic, current, and gas sensors; deodorizing, spunbond, cupro, multifunctional, and heat-press formable thermoplastic nonwoven; and ecorise, biocradle, and bemliese products. It provides bags and containers; cooking products; cleaners; plastic packet cutting products; cyclohexyl methacrylate, bonded anchors, and microcrystalline cellulose; pharmaceuticals and diagnostic reagents, dialyzers, therapeutic apheresis, virus removal filters, defibrillators, AEDs, automated CPRs, fluid resuscitation pumps, wearable defibrillators, temperature management systems, and data solutions; construction materials; and remodeling services, as well as develops homes and apartments. The company was founded in 1922 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.