Valhi (NYSE:VHI) versus Perimeter Solutions (NYSE:PRM) Critical Survey

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Valhi and Perimeter Solutions, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valhi	1	0	0	0	1.00
Perimeter Solutions	2	0	4	0	2.33

Perimeter Solutions has a consensus price target of $42.75, indicating a potential upside of 58.86%. Given Perimeter Solutions’ stronger consensus rating and higher possible upside, analysts plainly believe Perimeter Solutions is more favorable than Valhi.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Valhi	$2.08 billion	0.20	-$57.60 million	($1.79)	-8.02
Perimeter Solutions	$652.86 million	6.75	-$206.37 million	($2.23)	-12.07

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

Profitability

This table compares Valhi and Perimeter Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Valhi	-2.36%	-2.77%	-1.45%
Perimeter Solutions	-44.86%	19.15%	7.31%

Insider and Institutional Ownership

3.8% of Valhi shares are held by institutional investors. Comparatively, 89.9% of Perimeter Solutions shares are held by institutional investors. 0.2% of Valhi shares are held by insiders. Comparatively, 13.1% of Perimeter Solutions shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Valhi has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500. Comparatively, Perimeter Solutions has a beta of 1.92, suggesting that its stock price is 92% more volatile than the S&P 500.

Summary

Perimeter Solutions beats Valhi on 9 of the 14 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 Perimeter Solutions

Perimeter Solutions, SA manufactures and supplies firefighting products and lubricant additives in the United States, Germany, and internationally. It operates in two segments, Fire Safety and Specialty Products. The Fire Safety segment provides fire retardants and firefighting foams, as well as specialized equipment and services for federal, state, provincial, local/municipal, and commercial customers. The Specialty Products segment produces and sells Phosphorus Pentasulfide, which is primarily used in the preparation of lubricant additives, including a family of compounds called Zinc Dialkyldithiophosphates. The company offers its products under the PHOS-CHEK, FIRE-TROL, AUXQUIMIA, and SOLBERG brands. Perimeter Solutions, SA was founded in 1963 and is headquartered in Clayton, Missouri.