Value
8.8/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
| EV/EBITDA | 4.0 |
| Fwd P/E | 10.0 |
| PEG | 10.0 |
- ▸Forward P/E: 4.3x
- ▸PEG: 0.00
- ▸Attractively valued
VHI · Why this verdict
Why Valhi (VHI) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictHOLD
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Valhi is a deeply discounted chemicals holding (4.4x forward P/E, 8/9 Piotroski) whose earnings are highly concentrated in TiO2 and a few customers, with below-floor quality and weak margins.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Concentration is the dominant risk: 90.0% of the Chemicals segment depends on TiO2, a single commodity product. Bear case | TiO2 pricing and volumes stabilize so segment results hold over 12 months. | ↓Deteriorating |
| CounterConcentration in a commodity pigment can be a strength at the cycle trough, and the business has conservative debt levels relative to peers. | ||
Price is below its 200-day average but the average is still rising 3.4% per 30 days, a pullback in an uptrend rather than confirmed weakness, although on-balance volume is falling. Momentum breakdown | Price reclaims its 200-day moving average and the momentum score rises above 4.5 within 12 months. | ↑Improving |
| CounterFalling on-balance volume and a momentum score of 3.4/10 suggest distribution, and the pullback may deepen. | ||
The Component Products segment relies on its top ten customers for 52.0% of sales, creating exposure to the loss of a single large account. Bear case | Top-ten customer share stays at or below 52% of segment sales over 12 months. | ↓Deteriorating |
| CounterLong-standing customer relationships in component products are sticky, and a concentration ratio of 52% across ten buyers is not extreme. | ||
Quality is below the 4.0 floor at 3.3/10: operating margin scores 2.7/10 and ROE and net margin score 0, with no competitive moat despite a Piotroski F-Score of 8/9. Quality breakdown | Operating margin and net margin recover enough to lift the quality score above 4.0 within 12 months. | →Stable |
| CounterA Piotroski F-Score of 8/9 suggests improving fundamentals, so depressed margins may be cyclical and close to trough. | ||
Valuation is very cheap with a forward P/E of 4.4x, and quarterly revenue has risen to $606M from $540M a year earlier. Valuation breakdown | Quarterly revenue holds above $550M and forward earnings estimates support the 4.4x forward multiple. | →Stable |
| CounterA low multiple on cyclical chemicals earnings can signal peak profits, and there is no analyst target to confirm upside. | ||
Concentration is the dominant risk: 90.0% of the Chemicals segment depends on TiO2, a single commodity product.
↓DeterioratingBear case
- Expectation
- TiO2 pricing and volumes stabilize so segment results hold over 12 months.
CounterConcentration in a commodity pigment can be a strength at the cycle trough, and the business has conservative debt levels relative to peers.
Price is below its 200-day average but the average is still rising 3.4% per 30 days, a pullback in an uptrend rather than confirmed weakness, although on-balance volume is falling.
↑ImprovingMomentum breakdown
- Expectation
- Price reclaims its 200-day moving average and the momentum score rises above 4.5 within 12 months.
CounterFalling on-balance volume and a momentum score of 3.4/10 suggest distribution, and the pullback may deepen.
The Component Products segment relies on its top ten customers for 52.0% of sales, creating exposure to the loss of a single large account.
↓DeterioratingBear case
- Expectation
- Top-ten customer share stays at or below 52% of segment sales over 12 months.
CounterLong-standing customer relationships in component products are sticky, and a concentration ratio of 52% across ten buyers is not extreme.
Quality is below the 4.0 floor at 3.3/10: operating margin scores 2.7/10 and ROE and net margin score 0, with no competitive moat despite a Piotroski F-Score of 8/9.
→StableQuality breakdown
- Expectation
- Operating margin and net margin recover enough to lift the quality score above 4.0 within 12 months.
CounterA Piotroski F-Score of 8/9 suggests improving fundamentals, so depressed margins may be cyclical and close to trough.
Valuation is very cheap with a forward P/E of 4.4x, and quarterly revenue has risen to $606M from $540M a year earlier.
→StableValuation breakdown
- Expectation
- Quarterly revenue holds above $550M and forward earnings estimates support the 4.4x forward multiple.
CounterA low multiple on cyclical chemicals earnings can signal peak profits, and there is no analyst target to confirm upside.
Per-dimension breakdown
Quality
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.3 |
| Gross margin | 0.0 |
| Op margin | 2.7 |
| Net margin | 0.0 |
| Current ratio | 9.6 |
| Moat | 5.0 |
| Piotroski F | 8.9 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
5.5/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 5.5 |
Momentum
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 6.8 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 1.1 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+2.9%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| erm sentiment | 5.0 |
Insider
5.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.5 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
6.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.6 |
| quality rank | 4.5 |
| growth rank | 5.4 |
- ▸Conservative debt levels
Technical
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.4 |
| support resistance | 8.6 |
| 52w position | 4.7 |
| gap | 6.0 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.7 |
| days to cover | 4.8 |
| volatility | 3.1 |
| beta | 6.8 |
| debt equity | 8.3 |
- ▸Concentration risks: 2 HIGH, 3 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 8.0 |
- ▸Earnings concerns: 2B/2M
- ▸Earnings in 7 days
- ▸Dividend aristocrat: 2.3% yield
How the verdict was assembled
Engine trigger
Market cap $396M below $400M minimum. Not in investable universe.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:MARKET_CAPPassed (4)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.9<4.5
- EARNINGS_PROXIMITY:7d<=7d
Warning (2)
- ASYMMETRY:UPSIDE_EXHAUSTED (upside=0.0%)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.00
Upside
+0.0%
Downside
7.5%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeSector Rotation — Basic Materials sector out of favor, value=8.8
SuitabilityAggressive — MCap $0.4B<$5B
Investment implication
The HOLD_IF_HOLDING verdict reflects the MOMENTUM gate's 2.9<4.5 outcome against Value at 8.8 and asymmetric R:R of 0.00.
The strongest dimensions are Value at 8.8, Technical at 6.9, and Peer rank at 6.7; the weakest are Momentum at 2.9, Quality at 3.3, and Sentiment at 5.0. The V9 engine flagged 2 failed gates with 2 warnings, producing an asymmetric reward-to-risk of 0.00 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Tio2 Product Concentration
Trip ifTiO2 share of Chemicals segment sales exceeds 95% from the current 90.0%.
- P2Customer Concentration Component Products
Trip ifTop ten customers' share of Component Products sales exceeds 60% from the current 52.0%.
- P3Low Quality Thin Margins
Trip ifQuality score falls below 3.0/10 from the current 3.3.
- P4Cheap Valuation Cyclical Trough
Trip ifQuarterly revenue falls below $500M from the latest $606M.
- P5Pullback In Rising Trend
Trip ifShare price drops to below the $13.39 support level.