Financial Analysis: Valhi (VHI) versus Linde (LIN)

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

Insider & Institutional Ownership

3.7% of Valhi shares are owned by institutional investors. Comparatively, 75.3% of Linde shares are owned by institutional investors. 0.0% of Valhi shares are owned by company insiders. Comparatively, 0.2% of Linde shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Valhi and Linde’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Valhi $1.88 billion 0.42 $207.50 million N/A N/A
Linde $11.44 billion 4.03 $1.25 billion $5.85 27.39

Linde has higher revenue and earnings than Valhi.

Dividends

Valhi pays an annual dividend of $0.08 per share and has a dividend yield of 3.4%. Linde pays an annual dividend of $2.47 per share and has a dividend yield of 1.5%. Linde pays out 42.2% of its earnings in the form of a dividend.

Risk and Volatility

Valhi has a beta of 2.23, indicating that its stock price is 123% more volatile than the S&P 500. Comparatively, Linde has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Valhi and Linde, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Valhi 0 0 0 0 N/A
Linde 1 4 8 0 2.54

Linde has a consensus price target of $184.33, suggesting a potential upside of 15.06%. Given Linde’s higher probable upside, analysts plainly believe Linde is more favorable than Valhi.

Profitability

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

Net Margins Return on Equity Return on Assets
Valhi 19.95% 169.17% 12.51%
Linde 11.93% 28.54% 9.41%

Summary

Linde beats Valhi on 8 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 worldwide. 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. This segment also offers iron-based chemicals, titanium oxychlorides, and titanyl sulfates. 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 gaming machines, medical cabinetry security, electronic circuit panels, storage compartments, and gas station security applications. This segment also provides stainless steel exhaust components, gauges, throttle controls, trim tabs, hardware, and accessories primarily for performance and ski/wakeboard boats. The company's Real Estate Management and Development segment provides utility services to industrial and municipal customers; owns real properties; and develops land holdings for commercial, industrial, and residential purposes. Valhi, Inc. also offers insurance brokerage and risk management services; and holds marketable securities and other investments. The company was founded in 1932 and is based in Dallas, Texas. Valhi, Inc. is a subsidiary of Contran Corporation.

About Linde

Linde plc operates as an industrial gas and engineering company. The company offers oxygen, nitrogen, argon, rare gases, carbon monoxide, carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene, shielding gases, and noble gases, as well as develops and distributes procedures and systems for gas applications. It also offers pharmaceutical and medical gases and services to the healthcare industry; and support services, technical equipment, and safety products, as well as develops hydrogen technology. In addition, the company supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders; offers electric arc, plasma and wire spray, and high-velocity oxy-fuel equipment; and distributes hardgoods and welding equipment purchased from independent manufacturers. Further, it provides planning, project development, and construction services with a focus on market segments, such as olefin, natural gas, air separation, and hydrogen and synthesis gas plants. The company serves customers worldwide. Linde plc was founded in 1907 and is based in Guildford, the United Kingdom.

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