Valhi, Inc. (NYSE:VHI) shares have had a really impressive month, gaining 26% after a shaky period beforehand. Longer-term shareholders would be thankful for the recovery in the share price since it's now virtually flat for the year after the recent bounce.
Even after such a large jump in price, considering around half the companies operating in the United States' Chemicals industry have price-to-sales ratios (or "P/S") above 1.4x, you may still consider Valhi as an solid investment opportunity with its 0.2x P/S ratio. However, the P/S might be low for a reason and it requires further investigation to determine if it's justified.
NYSE:VHI Price to Sales Ratio vs Industry April 6th 2024
How Valhi Has Been Performing
For instance, Valhi's receding revenue in recent times would have to be some food for thought. Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer. Those who are bullish on Valhi will be hoping that this isn't the case so that they can pick up the stock at a lower valuation.
Although there are no analyst estimates available for Valhi, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.
What Are Revenue Growth Metrics Telling Us About The Low P/S?
The only time you'd be truly comfortable seeing a P/S as low as Valhi's is when the company's growth is on track to lag the industry.
Taking a look back first, the company's revenue growth last year wasn't something to get excited about as it posted a disappointing decline of 13%. At least revenue has managed not to go completely backwards from three years ago in aggregate, thanks to the earlier period of growth. Accordingly, shareholders probably wouldn't have been overly satisfied with the unstable medium-term growth rates.
This is in contrast to the rest of the industry, which is expected to grow by 5.8% over the next year, materially higher than the company's recent medium-term annualised growth rates.
In light of this, it's understandable that Valhi's P/S sits below the majority of other companies. It seems most investors are expecting to see the recent limited growth rates continue into the future and are only willing to pay a reduced amount for the stock.
The Final Word
Despite Valhi's share price climbing recently, its P/S still lags most other companies. While the price-to-sales ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of revenue expectations.
As we suspected, our examination of Valhi revealed its three-year revenue trends are contributing to its low P/S, given they look worse than current industry expectations. Right now shareholders are accepting the low P/S as they concede future revenue probably won't provide any pleasant surprises. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.
We don't want to rain on the parade too much, but we did also find 2 warning signs for Valhi that you need to be mindful of.
If these risks are making you reconsider your opinion on Valhi, explore our interactive list of high quality stocks to get an idea of what else is out there.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Valhi, Inc.(紐約證券交易所代碼:VHI)的股價經歷了一個非常令人印象深刻的月份,在經歷了動盪時期之後上漲了26%。長期股東將對股價的回升表示感謝,因爲在最近的反彈之後的一年中,股價幾乎持平。
即使在價格大幅上漲之後,考慮到在美國化工行業運營的公司中約有一半的市銷率(或 “市銷率”)高於1.4倍,您仍然可以將Valhi的市銷率視爲穩健的投資機會,其市銷率爲0.2倍。但是,市銷率低可能是有原因的,需要進一步調查以確定其是否合理。
紐約證券交易所:VHI 與行業的股價銷售比率 2024 年 4 月 6 日
Valhi 的表現如何
例如,Valhi最近收入的下降值得深思。也許市場認爲最近的收入表現不足以維持該行業的步伐,從而導致市銷率受到影響。那些看好Valhi的人會希望情況並非如此,這樣他們就可以以較低的估值買入股票。
儘管沒有分析師對Valhi的估計,但請看一下這個免費的數據豐富的可視化圖表,看看該公司在收益、收入和現金流方面的積累情況。
收入增長指標告訴我們低市銷率有哪些?
只有當公司的增長有望落後於該行業時,你才能真正放心地看到像Valhi一樣低的市銷率。
首先回顧一下,該公司去年的收入增長並不令人興奮,因爲它公佈了令人失望的13%的跌幅。至少由於較早的增長期,總收入沒有與三年前相比完全倒退。因此,股東們可能不會對不穩定的中期增長率過於滿意。
這與該行業的其他部門形成鮮明對比,預計明年該行業將增長5.8%,大大高於該公司最近的中期年化增長率。
有鑑於此,可以理解Valhi的市銷率低於其他大部分公司。看來大多數投資者都預計近期的有限增長率將持續到未來,他們只願意爲該股支付較低的金額。
最後一句話
儘管Valhi最近股價上漲,但其市銷率仍然落後於大多數其他公司。儘管市銷率不應該成爲決定你是否買入股票的決定性因素,但它是衡量收入預期的有力晴雨表。
正如我們所懷疑的那樣,我們對Valhi的檢查顯示,其三年收入趨勢是其低市銷率的原因,因爲這些趨勢看起來不如當前的行業預期。目前,股東們正在接受低市銷率,因爲他們承認未來的收入可能不會帶來任何驚喜。除非最近的中期狀況有所改善,否則它們將繼續構成股價在這些水平附近的障礙。
我們不想在遊行隊伍中下太多雨,但我們也確實爲Valhi找到了兩個需要注意的警告標誌。
如果這些風險讓你重新考慮你對Valhi的看法,請瀏覽我們的高質量股票互動清單,了解還有什麼。
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Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。