Value
8.0/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 10.0 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 10.0 |
| PEG | 10.0 |
- ▸Forward P/E: 4.4x
- ▸PEG: 0.02
- ▸Attractively valued
VHI · Why this verdict
Why Valhi (VHI) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a $0.4 billion market cap, the stock sits below the reach of many institutional investors, an edge the engine flags that can leave shares under-owned and mispriced relative to fundamentals. Edge rationale | As market cap grows or institutional ownership increases over the next 12 months, this constraint-driven mispricing edge should narrow as the price adjusts. | →Stable |
| CounterBeing below institutional reach can also reflect genuine below-average business quality, as flagged in the key risks, rather than solely a size-driven mispricing. | ||
Valhi trades at a deeply discounted valuation with a forward P/E of 4.4x and a PEG ratio of 0.02, the primary basis for its value score of 8.0. Valuation breakdown | The forward P/E should remain below 7x over the next 12 months to sustain the deep-value case. | →Stable |
| CounterA quality score below the engine's floor suggests the extreme cheapness may reflect genuine business deterioration in a mature chemicals business rather than a market mispricing. | ||
The stock's quality score of 2.8 sits below the engine's 4.0 minimum floor, triggering an exit recommendation, with no discernible competitive moat. Bear case | The quality score should climb back above the 4.0 floor over the next 12 months for the exit call to be reconsidered. | →Stable |
| CounterA solid Piotroski F-Score of 6.7 out of 9 suggests underlying financial-statement strength that argues against the severity of the quality floor breach. | ||
The stock is in a technical breakout with a golden cross, trading above all moving averages with bullish MACD, though it just failed the engine's momentum gate at 4.4 against the 4.5 threshold, with the 200-day moving average slope described as flat. Engine gate (failed) | The momentum score should climb past 4.5 over the next 2 quarters to clear the gate and confirm the breakout. | →Stable |
| CounterFalling on-balance volume alongside a flat moving-average slope suggests the breakout lacks strong underlying buying conviction. | ||
The engine flags upside as exhausted with an asymmetry ratio of 0.0 and 0% implied upside at current levels. Gates warning | A new positive-asymmetry setup with upside above 5% should emerge over the next 12 months for the exhausted-upside flag to clear. | →Stable |
| CounterA high dividend-safety reading of 222% suggests the total-return case may not depend entirely on price asymmetry. | ||
At a $0.4 billion market cap, the stock sits below the reach of many institutional investors, an edge the engine flags that can leave shares under-owned and mispriced relative to fundamentals.
→StableEdge rationale
- Expectation
- As market cap grows or institutional ownership increases over the next 12 months, this constraint-driven mispricing edge should narrow as the price adjusts.
CounterBeing below institutional reach can also reflect genuine below-average business quality, as flagged in the key risks, rather than solely a size-driven mispricing.
Valhi trades at a deeply discounted valuation with a forward P/E of 4.4x and a PEG ratio of 0.02, the primary basis for its value score of 8.0.
→StableValuation breakdown
- Expectation
- The forward P/E should remain below 7x over the next 12 months to sustain the deep-value case.
CounterA quality score below the engine's floor suggests the extreme cheapness may reflect genuine business deterioration in a mature chemicals business rather than a market mispricing.
The stock's quality score of 2.8 sits below the engine's 4.0 minimum floor, triggering an exit recommendation, with no discernible competitive moat.
→StableBear case
- Expectation
- The quality score should climb back above the 4.0 floor over the next 12 months for the exit call to be reconsidered.
CounterA solid Piotroski F-Score of 6.7 out of 9 suggests underlying financial-statement strength that argues against the severity of the quality floor breach.
The stock is in a technical breakout with a golden cross, trading above all moving averages with bullish MACD, though it just failed the engine's momentum gate at 4.4 against the 4.5 threshold, with the 200-day moving average slope described as flat.
→StableEngine gate (failed)
- Expectation
- The momentum score should climb past 4.5 over the next 2 quarters to clear the gate and confirm the breakout.
CounterFalling on-balance volume alongside a flat moving-average slope suggests the breakout lacks strong underlying buying conviction.
The engine flags upside as exhausted with an asymmetry ratio of 0.0 and 0% implied upside at current levels.
→StableGates warning
- Expectation
- A new positive-asymmetry setup with upside above 5% should emerge over the next 12 months for the exhausted-upside flag to clear.
CounterA high dividend-safety reading of 222% suggests the total-return case may not depend entirely on price asymmetry.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Valhi trades at a deeply discounted 4.4x forward P/E within a technical breakout setup, but a quality score below the engine's floor, a narrowly failed momentum gate, and an asymmetry reading flagging exhausted upside argue the cheapness may reflect real fundamental weakness rather than mispricing.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 0.0 |
| Op margin | 2.2 |
| Net margin | 0.0 |
| Current ratio | 9.8 |
| Moat | 3.9 |
| Piotroski F | 6.7 |
- ▸No competitive moat
- ▸Quality concerns
Growth
6.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.5 |
| EPS growth | 10.0 |
Momentum
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 3.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 3.7 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -2.1%/30d — confirmed downtrend
Sentiment
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| erm sentiment | 5.0 |
Insider
7.5/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.7 |
| quality rank | 4.2 |
| growth rank | 6.0 |
- ▸Conservative debt levels
Technical
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.8 |
| support resistance | 5.5 |
| 52w position | 4.0 |
| gap | 5.0 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.8 |
| days to cover | 6.6 |
| volatility | 0.0 |
| beta | 7.3 |
| debt equity | 8.1 |
- ▸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
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:30d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:2.6<4.5
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
10.5%
Sizing output
AVOID
SetupRange Bound — RSI 42 mid-range, Bollinger mid-band
EdgeInst Constrain — Small cap ($0.4B) below institutional reach
SuitabilityAggressive — MCap $0.4B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 8.0 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:2.6<4.5.
The strongest dimensions are Value at 8.0, Insider at 7.5, and Peer rank at 6.9; the weakest are Momentum at 2.6, Quality at 2.8, and Sentiment at 5.0. The V9 engine flagged 1 failed gate 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.
- P1Deep Value Extreme Cheapness
Trip ifForward P/E rises above 8x from the current 4.4x.
- P2Quality Floor Breach
Trip ifQuality score rises above 4.0 from the current 2.8.
- P3Technical Breakout Flat Momentum
Trip ifMomentum score falls below 3.5 from the current 4.4.
- P4Asymmetry Exhausted No Edge
Trip ifAsymmetry ratio rises above 1.5 from the current 0.0.
- P5Institutional Constraint Small Cap Edge
Trip ifMarket capitalization rises above $1.5 billion from the current $0.4 billion.