NEW YORK ( TheStreet) -- Valhi Incorporated (NYSE: VHI) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 21.4%. Since the same quarter one year prior, revenues rose by 37.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • VALHI INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. During the past fiscal year, VALHI INC turned its bottom line around by earning $0.42 versus -$0.30 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 1064.4% when compared to the same quarter one year prior, rising from $4.50 million to $52.40 million.
  • Net operating cash flow has significantly increased by 985.18% to $58.60 million when compared to the same quarter last year. In addition, VALHI INC has also vastly surpassed the industry average cash flow growth rate of 31.59%.
  • 37.90% is the gross profit margin for VALHI INC which we consider to be strong. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 9.10% trails the industry average.

Valhi, Inc., through its subsidiaries, operates in the chemicals, component products, and waste management businesses. Valhi has a market cap of $4.7 billion and is part of the basic materials sector and chemicals industry. Shares are up 62.2% year to date as of the close of trading on Tuesday.

You can view the full Valhi Ratings Report or get investment ideas from our investment research center.