Valhi (NYSE:VHI – Get Free Report) and Flexible Solutions International (NYSE:FSI – Get Free Report) are both small-cap materials companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, dividends, analyst recommendations, earnings and profitability.
Earnings & Valuation
This table compares Valhi and Flexible Solutions International”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Valhi | $2.16 billion | 0.21 | -$57.60 million | ($1.79) | -9.02 |
| Flexible Solutions International | $39.34 million | 1.66 | $2.78 million | ($0.24) | -21.30 |
Dividends
Valhi pays an annual dividend of $0.32 per share and has a dividend yield of 2.0%. Flexible Solutions International pays an annual dividend of $0.15 per share and has a dividend yield of 2.9%. Valhi pays out -17.9% of its earnings in the form of a dividend. Flexible Solutions International pays out -62.5% 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. Flexible Solutions International is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares Valhi and Flexible Solutions International’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Valhi | -2.36% | -2.77% | -1.45% |
| Flexible Solutions International | 10.80% | 10.61% | 7.32% |
Risk and Volatility
Valhi has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500. Comparatively, Flexible Solutions International has a beta of 1.66, suggesting that its share price is 66% more volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of recent ratings for Valhi and Flexible Solutions International, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Valhi | 1 | 0 | 0 | 0 | 1.00 |
| Flexible Solutions International | 0 | 1 | 0 | 1 | 3.00 |
Insider & Institutional Ownership
3.8% of Valhi shares are held by institutional investors. Comparatively, 54.3% of Flexible Solutions International shares are held by institutional investors. 0.2% of Valhi shares are held by insiders. Comparatively, 35.8% of Flexible Solutions International shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Summary
Flexible Solutions International beats Valhi on 14 of the 15 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 Flexible Solutions International
Flexible Solutions International, Inc., together with its subsidiaries, develops, manufactures, and markets specialty chemicals that slow the evaporation of water in Canada, the United States, and internationally. The company operates in two segments, Energy and Water Conservation Products, and Biodegradable Polymers. The company offers thermal polyaspartates (TPAs) for oilfields to reduce scale and corrosion in various water systems; and for the agricultural industry to reduce fertilizer crystallization before, during, and after application, as well as to prevent crystal formation between fertilizer and minerals present in the soil. It also provides TPAs for irrigation to prevent early plugging of drip irrigation ports, reduce maintenance costs, and lengthen the life of equipment; TPAs for cleaning products to prevents the re-deposition of dirt onto the surfaces; and TPAs as additives for household laundry detergents, consumer care products, and pesticides. In addition, the company offers nitrogen conservation products for agriculture that slow down nitrogen loss from fields. Further, it provides HEATSAVR, a chemical product for use in swimming pools and spas that forms a thin and transparent layer on the water's surface; and WATERSAVR to reduce water evaporation in reservoirs, potable water storage tanks, livestock watering ponds, aqueducts, canals, and irrigation ditches, as well as for lawn and turf care, and potted and bedding plants. The company was incorporated in 1991 and is headquartered in Taber, Canada.
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