Valhi Profitability Analysis

VHI Stock  USD 18.70  0.35  1.84%   
Considering the key profitability indicators obtained from Valhi's historical financial statements, Valhi Inc may not be well positioned to generate adequate gross income at this time. It has a very high probability of underperforming in July. Profitability indicators assess Valhi's ability to earn profits and add value for shareholders.
 
Net Loss  
First Reported
1990-03-31
Previous Quarter
3.9 M
Current Value
7.8 M
Quarterly Volatility
43 M
 
Oil Shock
 
Dot-com Bubble
 
Housing Crash
 
Credit Downgrade
 
Yuan Drop
 
Covid
The Valhi's current Sales General And Administrative To Revenue is estimated to increase to 0.18, while Price To Sales Ratio is projected to decrease to 0.21. As of now, Valhi's Interest Income is decreasing as compared to previous years. The Valhi's current Change To Netincome is estimated to increase to about 26.9 M, while Accumulated Other Comprehensive Income is projected to decrease to (152.8 M).
Current ValueLast YearChange From Last Year 10 Year Trend
Gross Profit Margin0.120.1276
Notably Down
Slightly volatile
For Valhi profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Valhi to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well Valhi Inc utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Valhi's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Valhi Inc over time as well as its relative position and ranking within its peers.
  

Valhi's Revenue Breakdown by Earning Segment

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Is Specialty Chemicals space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Valhi. If investors know Valhi will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Valhi listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth
(0.32)
Dividend Share
0.32
Earnings Share
0.02
Revenue Per Share
68.758
Quarterly Revenue Growth
0.077
The market value of Valhi Inc is measured differently than its book value, which is the value of Valhi that is recorded on the company's balance sheet. Investors also form their own opinion of Valhi's value that differs from its market value or its book value, called intrinsic value, which is Valhi's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Valhi's market value can be influenced by many factors that don't directly affect Valhi's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Valhi's value and its price as these two are different measures arrived at by different means. Investors typically determine if Valhi is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Valhi's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.

Valhi Inc Return On Asset vs. Return On Equity Fundamental Analysis

Comparative valuation techniques use various fundamental indicators to help in determining Valhi's current stock value. Our valuation model uses many indicators to compare Valhi value to that of its competitors to determine the firm's financial worth.
Valhi Inc is rated below average in return on equity category among its peers. It is rated below average in return on asset category among its peers reporting about  0.18  of Return On Asset per Return On Equity. The ratio of Return On Equity to Return On Asset for Valhi Inc is roughly  5.68 . As of now, Valhi's Return On Equity is increasing as compared to previous years. The reason why the comparable model can be used in almost all circumstances is due to the vast number of multiples that can be utilized, such as the price-to-earnings (P/E), price-to-book (P/B), price-to-sales (P/S), price-to-cash flow (P/CF), and many others. The P/E ratio is the most commonly used of these ratios because it focuses on the Valhi's earnings, one of the primary drivers of an investment's value.

Valhi Return On Asset vs. Return On Equity

Return on Equity or ROE tells company stockholders how effectually their money is being utilized or reinvested. It is a useful ratio when analyzing company profitability or the management effectiveness given the capital invested by the shareholders. ROE shows how efficiently a company utilizes investments to generate income.

Valhi

Return On Equity

 = 

Net Income

Total Equity

 = 
0.0159
For most industries, Return on Equity between 10% and 30% are considered desirable to provide dividends to owners and have funds for the future growth of the company. Investors should be very careful using ROE as the only efficiency indicator because ROE can be high if a company is heavily leveraged.
Return on Asset or ROA shows how effective is the management of the company in generating income from utilizing all of the assets at their disposal. It is a useful ratio to evaluate the performance of different departments of a company as well as to understand management performance over time.

Valhi

Return On Asset

 = 

Net Income

Total Assets

 = 
0.0028
Return on Asset measures overall efficiency of a company in generating profits from its total assets. It is expressed as the percentage of profits earned per dollar of Asset. A low ROA typically means that a company is asset-intensive and therefore will needs more money to continue generating revenue in the future.

Valhi Return On Asset Comparison

Valhi is currently under evaluation in return on asset category among its peers.

Valhi Profitability Projections

The most important aspect of a successful company is its ability to generate a profit. For investors in Valhi, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Valhi will eventually generate negative long term returns. The profitability progress is the general direction of Valhi's change in net profit over the period of time. It can combine multiple indicators of Valhi, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
Last ReportedProjected for Next Year
Accumulated Other Comprehensive Income-145.5 M-152.8 M
Operating Income-32.2 M-30.6 M
Income Before Tax-19.5 M-18.5 M
Total Other Income Expense Net12.7 M12.1 M
Net Loss-12.1 M-11.5 M
Income Tax Expense-22.4 M-21.3 M
Net Income Applicable To Common Shares103.7 M92.6 M
Net Loss-18.3 M-17.4 M
Non Operating Income Net Other-2.3 M-2.4 M
Interest Income19.1 M20 M
Net Interest Income-9.3 M-9.8 M
Change To Netincome25.6 M26.9 M
Net Loss(0.42)(0.40)
Income Quality(0.32)(0.31)
Net Income Per E B T 0.62  0.55 

Valhi Profitability Driver Comparison

Profitability drivers are factors that can directly affect your investment outlook on Valhi. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Valhi position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Valhi's important profitability drivers and their relationship over time.

Valhi Profitability Trends

Valhi profitability trend refers to the progression of profit or loss within a business. An upward trend means that Valhi's profit has generally increased over time, and a downward profitability trend means profits are declining. Recognizing problems early in profitability trends allows investors to address revenue and cost issues in advance. Investors and analysts usually monitor three types of profitability trends: gross, operating, and net. Gross profit is the difference between revenue and costs of goods sold. Operating profit is Valhi's gross profit minus its overhead. After you account for other unusual revenue, expenses, and costs, you get net profit. Gross profit trends are often a good indicator of future profitability. If you have high gross profit margins, you have a better chance to cover overhead and make money.

Valhi Profitability Drivers Correlations

One of the toughest challenges investors face today is learning how to quickly synthesize and read into endless financial statements and information provided by the company, SEC reporting, and various external parties. Understanding the correlation between Valhi different financial indicators related to revenue and profit generation helps investors identify and prioritize their investing strategies towards Valhi in a much-optimized way. Analyzing correlations between profit drivers that are directly associated with dollar figures is the most effective way to break down Valhi's future profitability.

Use Valhi in pair-trading

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Valhi position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Valhi will appreciate offsetting losses from the drop in the long position's value.

Valhi Pair Trading

Valhi Inc Pair Trading Analysis

The ability to find closely correlated positions to Valhi could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Valhi when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Valhi - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Valhi Inc to buy it.
The correlation of Valhi is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Valhi moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Valhi Inc moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Valhi can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching

Use Investing Themes to Complement your Valhi position

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Cigarettes
Cigarettes Theme
Tobacco makers and distributors across globe. The Cigarettes theme has 40 constituents at this time.
You can either use a buy-and-hold strategy to lock in the entire theme or actively trade it to take advantage of the short-term price volatility of individual constituents. Macroaxis can help you discover thousands of investment opportunities in different asset classes. In addition, you can partner with us for reliable portfolio optimization as you plan to utilize Cigarettes Theme or any other thematic opportunities.
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Additional Information and Resources on Investing in Valhi Stock

When determining whether Valhi Inc offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Valhi's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Valhi Inc Stock. Outlined below are crucial reports that will aid in making a well-informed decision on Valhi Inc Stock:
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You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
To fully project Valhi's future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of Valhi Inc at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include Valhi's income statement, its balance sheet, and the statement of cash flows.
Potential Valhi investors and stakeholders can use historical trends found within financial statements to determine how well the company is positioned for the future. Although Valhi investors may work on each financial statement separately, they are all related. The changes in Valhi's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Valhi's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.