Intrinsic value of Valhi - VHI

Previous Close

$2.22

  Intrinsic Value

$1.12

stock screener

  Rating & Target

sell

-49%

  Value-price divergence*

+241%

Previous close

$2.22

 
Intrinsic value

$1.12

 
Up/down potential

-49%

 
Rating

sell

 
Value-price divergence*

+241%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of VHI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.22
  20.60
  19.04
  17.64
  16.37
  15.24
  14.21
  13.29
  12.46
  11.72
  11.04
  10.44
  9.90
  9.41
  8.97
  8.57
  8.21
  7.89
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.24
  6.12
  6.01
  5.91
  5.82
  5.73
Revenue, $m
  1,567
  1,890
  2,250
  2,646
  3,080
  3,549
  4,053
  4,592
  5,164
  5,769
  6,406
  7,075
  7,775
  8,506
  9,269
  10,063
  10,890
  11,749
  12,642
  13,570
  14,535
  15,537
  16,579
  17,663
  18,790
  19,963
  21,185
  22,458
  23,784
  25,168
  26,611
Variable operating expenses, $m
 
  1,941
  2,303
  2,702
  3,138
  3,611
  4,119
  4,661
  5,237
  5,846
  6,487
  7,123
  7,828
  8,564
  9,332
  10,131
  10,963
  11,828
  12,727
  13,662
  14,633
  15,642
  16,691
  17,782
  18,917
  20,098
  21,328
  22,609
  23,945
  25,338
  26,791
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,540
  1,941
  2,303
  2,702
  3,138
  3,611
  4,119
  4,661
  5,237
  5,846
  6,487
  7,123
  7,828
  8,564
  9,332
  10,131
  10,963
  11,828
  12,727
  13,662
  14,633
  15,642
  16,691
  17,782
  18,917
  20,098
  21,328
  22,609
  23,945
  25,338
  26,791
Operating income, $m
  27
  -51
  -53
  -56
  -59
  -62
  -65
  -69
  -73
  -77
  -81
  -48
  -52
  -57
  -63
  -68
  -74
  -79
  -85
  -92
  -98
  -105
  -112
  -119
  -127
  -135
  -143
  -152
  -161
  -170
  -180
EBITDA, $m
  95
  38
  46
  54
  62
  72
  82
  93
  105
  117
  130
  143
  158
  172
  188
  204
  221
  238
  256
  275
  295
  315
  336
  358
  381
  405
  430
  455
  482
  510
  540
Interest expense (income), $m
  61
  61
  87
  119
  154
  192
  233
  278
  326
  376
  430
  486
  545
  607
  672
  739
  810
  883
  959
  1,038
  1,120
  1,205
  1,294
  1,386
  1,482
  1,582
  1,685
  1,793
  1,906
  2,023
  2,146
Earnings before tax, $m
  3
  -112
  -140
  -174
  -212
  -254
  -299
  -347
  -399
  -453
  -511
  -534
  -598
  -665
  -735
  -807
  -883
  -962
  -1,044
  -1,129
  -1,218
  -1,310
  -1,406
  -1,505
  -1,609
  -1,716
  -1,828
  -1,945
  -2,067
  -2,193
  -2,325
Tax expense, $m
  6
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -16
  -112
  -140
  -174
  -212
  -254
  -299
  -347
  -399
  -453
  -511
  -534
  -598
  -665
  -735
  -807
  -883
  -962
  -1,044
  -1,129
  -1,218
  -1,310
  -1,406
  -1,505
  -1,609
  -1,716
  -1,828
  -1,945
  -2,067
  -2,193
  -2,325

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  164
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  2,443
  2,948
  3,510
  4,128
  4,804
  5,536
  6,323
  7,164
  8,056
  9,000
  9,994
  11,037
  12,130
  13,270
  14,460
  15,699
  16,988
  18,329
  19,722
  21,170
  22,675
  24,239
  25,864
  27,555
  29,313
  31,144
  33,050
  35,036
  37,105
  39,263
  41,515
Adjusted assets (=assets-cash), $m
  2,279
  2,948
  3,510
  4,128
  4,804
  5,536
  6,323
  7,164
  8,056
  9,000
  9,994
  11,037
  12,130
  13,270
  14,460
  15,699
  16,988
  18,329
  19,722
  21,170
  22,675
  24,239
  25,864
  27,555
  29,313
  31,144
  33,050
  35,036
  37,105
  39,263
  41,515
Revenue / Adjusted assets
  0.688
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
  0.641
Average production assets, $m
  627
  756
  900
  1,059
  1,232
  1,420
  1,621
  1,837
  2,066
  2,308
  2,562
  2,830
  3,110
  3,403
  3,708
  4,025
  4,356
  4,700
  5,057
  5,428
  5,814
  6,215
  6,632
  7,065
  7,516
  7,985
  8,474
  8,983
  9,514
  10,067
  10,644
Working capital, $m
  543
  467
  556
  654
  761
  877
  1,001
  1,134
  1,276
  1,425
  1,582
  1,748
  1,920
  2,101
  2,289
  2,486
  2,690
  2,902
  3,123
  3,352
  3,590
  3,838
  4,095
  4,363
  4,641
  4,931
  5,233
  5,547
  5,875
  6,216
  6,573
Total debt, $m
  965
  1,376
  1,882
  2,439
  3,047
  3,706
  4,414
  5,170
  5,974
  6,823
  7,718
  8,657
  9,640
  10,666
  11,737
  12,852
  14,013
  15,219
  16,473
  17,776
  19,130
  20,538
  22,001
  23,522
  25,105
  26,753
  28,468
  30,255
  32,118
  34,060
  36,086
Total liabilities, $m
  2,242
  2,653
  3,159
  3,716
  4,324
  4,983
  5,691
  6,447
  7,251
  8,100
  8,995
  9,934
  10,917
  11,943
  13,014
  14,129
  15,290
  16,496
  17,750
  19,053
  20,407
  21,815
  23,278
  24,799
  26,382
  28,030
  29,745
  31,532
  33,395
  35,337
  37,363
Total equity, $m
  201
  295
  351
  413
  480
  554
  632
  716
  806
  900
  999
  1,104
  1,213
  1,327
  1,446
  1,570
  1,699
  1,833
  1,972
  2,117
  2,267
  2,424
  2,586
  2,755
  2,931
  3,114
  3,305
  3,504
  3,711
  3,926
  4,151
Total liabilities and equity, $m
  2,443
  2,948
  3,510
  4,129
  4,804
  5,537
  6,323
  7,163
  8,057
  9,000
  9,994
  11,038
  12,130
  13,270
  14,460
  15,699
  16,989
  18,329
  19,722
  21,170
  22,674
  24,239
  25,864
  27,554
  29,313
  31,144
  33,050
  35,036
  37,106
  39,263
  41,514
Debt-to-equity ratio
  4.801
  4.670
  5.360
  5.910
  6.340
  6.690
  6.980
  7.220
  7.410
  7.580
  7.720
  7.840
  7.950
  8.040
  8.120
  8.190
  8.250
  8.300
  8.350
  8.400
  8.440
  8.470
  8.510
  8.540
  8.560
  8.590
  8.610
  8.640
  8.660
  8.670
  8.690
Adjusted equity ratio
  0.016
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -16
  -112
  -140
  -174
  -212
  -254
  -299
  -347
  -399
  -453
  -511
  -534
  -598
  -665
  -735
  -807
  -883
  -962
  -1,044
  -1,129
  -1,218
  -1,310
  -1,406
  -1,505
  -1,609
  -1,716
  -1,828
  -1,945
  -2,067
  -2,193
  -2,325
Depreciation, amort., depletion, $m
  68
  89
  99
  110
  121
  134
  148
  162
  178
  194
  211
  191
  210
  230
  251
  272
  294
  318
  342
  367
  393
  420
  448
  477
  508
  540
  573
  607
  643
  680
  719
Funds from operations, $m
  120
  -22
  -41
  -65
  -91
  -120
  -151
  -185
  -221
  -259
  -300
  -343
  -388
  -435
  -484
  -535
  -589
  -645
  -702
  -763
  -825
  -890
  -958
  -1,028
  -1,101
  -1,177
  -1,256
  -1,338
  -1,424
  -1,513
  -1,606
Change in working capital, $m
  40
  80
  89
  98
  107
  116
  125
  133
  141
  149
  157
  165
  173
  181
  188
  196
  204
  212
  221
  229
  238
  248
  257
  268
  278
  290
  302
  314
  328
  342
  356
Cash from operations, $m
  80
  -102
  -130
  -163
  -198
  -236
  -276
  -318
  -362
  -409
  -457
  -508
  -561
  -615
  -672
  -732
  -793
  -857
  -923
  -992
  -1,063
  -1,138
  -1,215
  -1,296
  -1,379
  -1,467
  -1,558
  -1,652
  -1,751
  -1,855
  -1,963
Maintenance CAPEX, $m
  0
  -42
  -51
  -61
  -72
  -83
  -96
  -110
  -124
  -140
  -156
  -173
  -191
  -210
  -230
  -251
  -272
  -294
  -318
  -342
  -367
  -393
  -420
  -448
  -477
  -508
  -540
  -573
  -607
  -643
  -680
New CAPEX, $m
  -59
  -129
  -144
  -159
  -173
  -188
  -202
  -215
  -229
  -242
  -255
  -268
  -280
  -293
  -305
  -318
  -331
  -344
  -357
  -371
  -386
  -401
  -417
  -433
  -451
  -469
  -489
  -509
  -531
  -553
  -577
Cash from investing activities, $m
  -62
  -171
  -195
  -220
  -245
  -271
  -298
  -325
  -353
  -382
  -411
  -441
  -471
  -503
  -535
  -569
  -603
  -638
  -675
  -713
  -753
  -794
  -837
  -881
  -928
  -977
  -1,029
  -1,082
  -1,138
  -1,196
  -1,257
Free cash flow, $m
  18
  -273
  -325
  -382
  -443
  -507
  -574
  -643
  -715
  -790
  -868
  -949
  -1,032
  -1,118
  -1,207
  -1,300
  -1,396
  -1,495
  -1,598
  -1,705
  -1,816
  -1,932
  -2,052
  -2,177
  -2,308
  -2,444
  -2,586
  -2,734
  -2,889
  -3,051
  -3,220
Issuance/(repayment) of debt, $m
  3
  411
  505
  557
  608
  659
  708
  756
  803
  849
  895
  939
  983
  1,027
  1,071
  1,115
  1,160
  1,206
  1,254
  1,303
  1,354
  1,407
  1,463
  1,521
  1,583
  1,647
  1,715
  1,787
  1,863
  1,942
  2,026
Issuance/(repurchase) of shares, $m
  0
  205
  196
  236
  280
  327
  378
  431
  488
  548
  610
  638
  707
  779
  854
  931
  1,012
  1,096
  1,183
  1,274
  1,368
  1,466
  1,568
  1,674
  1,785
  1,899
  2,019
  2,144
  2,274
  2,409
  2,551
Cash from financing (excl. dividends), $m  
  -19
  616
  701
  793
  888
  986
  1,086
  1,187
  1,291
  1,397
  1,505
  1,577
  1,690
  1,806
  1,925
  2,046
  2,172
  2,302
  2,437
  2,577
  2,722
  2,873
  3,031
  3,195
  3,368
  3,546
  3,734
  3,931
  4,137
  4,351
  4,577
Total cash flow (excl. dividends), $m
  -6
  343
  376
  411
  445
  479
  512
  544
  576
  607
  637
  629
  658
  687
  717
  747
  777
  808
  840
  873
  907
  942
  980
  1,019
  1,060
  1,103
  1,149
  1,197
  1,247
  1,301
  1,357
Retained Cash Flow (-), $m
  68
  -205
  -196
  -236
  -280
  -327
  -378
  -431
  -488
  -548
  -610
  -638
  -707
  -779
  -854
  -931
  -1,012
  -1,096
  -1,183
  -1,274
  -1,368
  -1,466
  -1,568
  -1,674
  -1,785
  -1,899
  -2,019
  -2,144
  -2,274
  -2,409
  -2,551
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  138
  180
  175
  165
  152
  135
  113
  88
  59
  26
  -10
  -49
  -91
  -137
  -185
  -235
  -288
  -344
  -402
  -462
  -524
  -589
  -656
  -725
  -796
  -870
  -947
  -1,026
  -1,109
  -1,194
Discount rate, %
 
  11.30
  11.87
  12.46
  13.08
  13.74
  14.42
  15.14
  15.90
  16.70
  17.53
  18.41
  19.33
  20.29
  21.31
  22.37
  23.49
  24.67
  25.90
  27.19
  28.55
  29.98
  31.48
  33.06
  34.71
  36.44
  38.27
  40.18
  42.19
  44.30
  46.51
PV of cash for distribution, $m
 
  124
  144
  123
  101
  80
  60
  42
  27
  15
  5
  -1
  -6
  -8
  -9
  -9
  -8
  -7
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  78.7
  66.9
  56.8
  48.2
  40.8
  34.6
  29.3
  24.8
  21.0
  17.8
  15.3
  13.0
  11.2
  9.5
  8.1
  7.0
  5.9
  5.1
  4.3
  3.7
  3.2
  2.7
  2.3
  2.0
  1.7
  1.4
  1.2
  1.0
  0.9
  0.8

Valhi, Inc. engages in the chemicals, component products, waste management, and real estate businesses worldwide. The company’s Chemicals segment offers titanium dioxide pigments to impart whiteness, brightness, opacity, and durability to products, such as paints, plastics, paper, fibers, and ceramics; critical components for use in coatings, plastics, and paper applications; and specialty products, including inks, foods, and cosmetics. This segment also owns and operates two ilmenite mines; and offers iron-based chemicals, titanium oxychloride, and titanyl sulfate. Its 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 gaming machines, medical cabinetry security, electronic circuit panels, storage compartments, and gas station security applications. This segment also provides marine components, including stainless steel exhaust headers and pipes, mufflers, other exhaust components, GPS speedometers and tachometers, mechanical and electronic controls and throttles, steering wheels and other billet aluminum accessories, dash panels, LED lighting, wire harnesses, and other accessories. The company’s Waste Management segment processes, treats, stores, and disposes radioactive, hazardous, toxic, and other wastes. This segment serves industrial companies, such as nuclear utilities, chemical, aerospace and electronics businesses, and governmental agencies. Its Real Estate Management and Development segment provides utility services to industrial and municipal customers; owns real properties; and develops land holdings for commercial, industrial, and residential purposes. It also offers insurance brokerage and risk management services, and holds marketable securities and other investments. The company was founded in 1932 and is based in Dallas, Texas. Valhi, Inc. is a subsidiary of Contran Corporation.

FINANCIAL RATIOS  of  Valhi (VHI)

Valuation Ratios
P/E Ratio -49.3
Price to Sales 0.5
Price to Book 3.9
Price to Tangible Book
Price to Cash Flow 9.9
Price to Free Cash Flow 37.5
Growth Rates
Sales Growth Rate 2.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.3%
Cap. Spend. - 3 Yr. Gr. Rate -4.7%
Financial Strength
Quick Ratio 21
Current Ratio 0.1
LT Debt to Equity 476.1%
Total Debt to Equity 480.1%
Interest Coverage 1
Management Effectiveness
Return On Assets -3.1%
Ret/ On Assets - 3 Yr. Avg. -0%
Return On Total Capital -1.3%
Ret/ On T. Cap. - 3 Yr. Avg. -2.5%
Return On Equity -6.8%
Return On Equity - 3 Yr. Avg. -10.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 18.6%
Gross Margin - 3 Yr. Avg. 18.3%
EBITDA Margin 8.4%
EBITDA Margin - 3 Yr. Avg. 8.3%
Operating Margin 1.7%
Oper. Margin - 3 Yr. Avg. 1.8%
Pre-Tax Margin 0.2%
Pre-Tax Margin - 3 Yr. Avg. 0.5%
Net Profit Margin -1%
Net Profit Margin - 3 Yr. Avg. -2.3%
Effective Tax Rate 200%
Eff/ Tax Rate - 3 Yr. Avg. 32.5%
Payout Ratio -168.8%

VHI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VHI stock intrinsic value calculation we used $1567 million for the last fiscal year's total revenue generated by Valhi. The default revenue input number comes from 2016 income statement of Valhi. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our VHI stock valuation model: a) initial revenue growth rate of 20.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 11.3%, whose default value for VHI is calculated based on our internal credit rating of Valhi, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Valhi.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of VHI stock the variable cost ratio is equal to 103.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for VHI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.3% for Valhi.

Corporate tax rate of 27% is the nominal tax rate for Valhi. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the VHI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for VHI are equal to 40%.

Life of production assets of 14.8 years is the average useful life of capital assets used in Valhi operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for VHI is equal to 24.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $201 million for Valhi - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 342.183 million for Valhi is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Valhi at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ Valhi posts 2Q profit   [Aug-09-17 03:26PM  Associated Press]
▶ VALHI DECLARES QUARTERLY DIVIDEND   [Aug-08-17 04:21PM  GlobeNewswire]
▶ VALHI REPORTS SECOND QUARTER 2017 RESULTS   [04:16PM  GlobeNewswire]
▶ Valhi, Inc. Value Analysis (NYSE:VHI) : August 7, 2017   [Aug-07-17 06:57PM  Capital Cube]
▶ VALHI REPORTS FIRST QUARTER 2017 RESULTS   [May-09-17 04:16PM  GlobeNewswire]
▶ Valhi, Inc. Value Analysis (NYSE:VHI) : April 24, 2017   [Apr-24-17 03:56PM  Capital Cube]
▶ Penny Stocks to Watch for April 2017 (ATRS, WRN)   [Mar-31-17 12:00PM  Investopedia]
▶ Valhi posts 4Q profit   [Mar-10-17 06:56PM  Associated Press]
▶ VALHI REPORTS FOURTH QUARTER 2016 RESULTS   [06:14PM  GlobeNewswire]
▶ VALHI DECLARES QUARTERLY DIVIDEND   [04:16PM  GlobeNewswire]
▶ IIROC Trading Resumption - SLL, VHI   [Dec-01-16 04:18PM  PR Newswire]
▶ VALHI REPORTS THIRD QUARTER 2016 RESULTS   [04:16PM  GlobeNewswire]
▶ VALHI DECLARES QUARTERLY DIVIDEND   [04:16PM  GlobeNewswire]
▶ VALHI DECLARES QUARTERLY DIVIDEND   [04:17PM  GlobeNewswire]
▶ VALHI REPORTS SECOND QUARTER 2016 RESULTS   [04:16PM  GlobeNewswire]
▶ VALHI ANNOUNCES QUARTERLY CASH DIVIDEND   [04:17PM  GlobeNewswire]
▶ VALHI REPORTS FIRST QUARTER 2016 RESULTS   [04:16PM  GlobeNewswire]
▶ VALHI REPORTS FOURTH QUARTER 2015 RESULTS   [04:16PM  GlobeNewswire]
▶ VALHI DECLARES QUARTERLY DIVIDEND   [04:17PM  GlobeNewswire]
Stock chart of VHI Financial statements of VHI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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