Valhi, Inc. — Earnings Quality Grade F
VHI · Basic Materials
Major red flags
Screening Summary
Management Signals
Financial Trends
Revenue & Net Income ($B)
Margins (%)
18-Point Screening
Revenue Quality
DSO 50 days, change +1 days YoY
AR growth 0.5% vs revenue growth -1.3%
Revenue -1.3%, CFFO -180.7%. Cash follows revenue
Expense Quality
Inventory -3.8% vs COGS 6.0%. Normal
CapEx growth 50.8% is >2x revenue growth -1.3%
SG&A/Gross Profit = 105.7%, exceeds 70%
Gross margin swung -5.9pp (20.2% → 14.2%)
Cash Flow Quality
CFFO < Net Income for 3 consecutive years
Small-cap context: Small-cap CFFO/NI often diverges from working-capital swings, not necessarily manipulation.
FCF is negative ($-0.1B)
Accruals ratio = -0.8%. Low accruals
Cash $0.2B covers only 35% of debt $0.6B
Balance Sheet Health
Goodwill+Intangibles $0.4B = 37% of equity
Debt/EBITDA = 7.6x (>4x). Interest coverage = -0.3x (<2x). Financial stress
Other assets -0.4% vs revenue -1.3%. Normal
No write-off data
Acquisition Risk
FCF after acquisitions negative for 3 years
Small-cap context: A single acquisition on a small balance sheet can trip serial-acquirer logic.
Goodwill+Intangibles change 0% YoY. Normal
Manipulation Score
M-Score = -2.30 (< -2.22). Unlikely manipulator
Portfolio monitoring
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Beneish M-Score
Altman Z-Score
Generated from public financial data using forensic accounting frameworks. Not investment advice. Data: Yahoo Finance · 2026-04-25