Lennox International (LII) AI Stock Analysis

• Market Cap: $19.97B
• Dividend Yield: 0.81%
• Average Volume (3M): 484.57K
• Price to Earnings (P/E): 24.9
• Beta (1Y): 1.15
• Revenue Growth: 7.21%
• EPS Growth: 36.45%
• Country: US
• Employees: 14,200
• Sector: Industrials
• Sector Strength: 61
• Industry: Construction
• EPS (TTM): 22.54
• Shares Outstanding: 35,468,304
• 10 Day Avg. Volume: 513,803
• 30 Day Avg. Volume: 484,566
• PEG Ratio: 0.68
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.79
• Price to Cash Flow (P/CF): 15.20
• P/FCF Ratio: 15.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $614.11
• Price Target Upside: 11.60% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 10

Lennox International's overall stock score is driven by strong financial performance and positive earnings call outcomes, indicating robust fundamentals and strategic growth. However, technical indicators suggest bearish momentum, and the current valuation implies expectations for high growth, which may limit short-term upside. Continued focus on debt management and strategic initiatives will be crucial for maintaining financial stability and achieving projected growth targets.

Positive Factors

Analyst Rating

Analyst upgrades the rating on LII to Overweight from Equal Weight, indicating increased confidence in the stock.

Financial Performance

Lennox International's fourth quarter earnings per share significantly exceeded expectations, indicating strong financial performance.

Operational Efficiency

Margins are a bright spot for Lennox, with operating margins coming in significantly above estimates due to stronger volumes and production rates.

Negative Factors

Guidance and Forecasts

Lennox's guidance for organic growth in 2025 is below consensus, indicating potential challenges in maintaining growth momentum.

Market Sentiment

LII has the second-highest short interest ratio among names in the coverage, suggesting skepticism from shorter-term investors.

Price Target

The price target has been lowered from $630 to $580, reflecting concerns about trading at a discount compared to competitors.

Lennox International Business Overview & Revenue Model

Company Description

Lennox International Inc., together with its subsidiaries, designs, manufactures, and markets a range of products for the heating, ventilation, air conditioning, and refrigeration markets in the United States, Canada, and internationally. It operates through three segments: Residential Heating & Cooling, Commercial Heating & Cooling, and Refrigeration. The Residential Heating & Cooling segment provides furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment and accessories, comfort control products, and replacement parts and supplies for residential replacement and new construction markets. The Commercial Heating & Cooling segment offers unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, and variable refrigerant flow commercial products for light commercial markets. The Refrigeration segment offers condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, and refrigeration rack systems for preserving food and other perishables in supermarkets, convenience stores, restaurants, warehouses, and distribution centers, as well as for data centers, machine tooling, and other cooling applications; and compressor racks and industrial process chillers. The company sells its products and services through direct sales, distributors, and company-owned parts and supplies stores. Lennox International Inc. was founded in 1895 and is headquartered in Richardson, Texas.

How the Company Makes Money

Lennox International makes money primarily through the sale of its HVAC and refrigeration products. The company's revenue streams are segmented into three main areas: Residential Heating & Cooling, Commercial Heating & Cooling, and Refrigeration. The Residential segment focuses on selling furnaces, air conditioners, heat pumps, and related equipment to homeowners and residential builders. The Commercial segment provides HVAC systems and services for office buildings, retail spaces, and other commercial facilities. The Refrigeration segment offers products for preserving and transporting perishable goods. Key factors contributing to Lennox's earnings include its extensive distribution network, strategic partnerships with distributors and contractors, and ongoing product innovation to meet energy efficiency and regulatory standards.

Lennox International Financial Statement Overview

Summary

Lennox International exhibits strong financial health with robust revenue and profit growth, improved equity position, and excellent cash flow generation. Despite its significant debt levels, the company has managed to strengthen its balance sheet and maintain strong profitability ratios. Continued focus on cash management and debt reduction could further enhance financial stability.

Income Statement

Lennox International has shown a strong revenue growth rate from 2023 to 2024, with revenues increasing from $4.98 billion to $5.34 billion, marking a growth of 7.2%. The company maintains robust profitability with a gross profit margin of 33.2% and a net profit margin of 15.1% in 2024. Additionally, both the EBIT and EBITDA margins are impressive at 19.4% for the same period, indicating operational efficiency.

Balance Sheet

The company has improved its financial position with a positive stockholders' equity of $850.2 million in 2024, reversing negative equity in prior years. The debt-to-equity ratio stands at 1.75, reflecting a moderate level of leverage. The equity ratio improved to 24.5%, indicating a better balance between debt and equity financing. However, the company still carries significant debt levels, which could pose risks if not managed properly.

Cash Flow

Lennox International's operating cash flow increased significantly to $945.7 million in 2024, with a strong free cash flow generation of $782.1 million. The free cash flow to net income ratio is 0.97, showing the company's ability to convert its profits into cash effectively. The operating cash flow to net income ratio is 1.17, highlighting strong cash flow generation capabilities. These positive cash flow metrics provide the company with flexibility for future investments and debt servicing.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
5.34B	4.98B	4.72B	4.19B	3.63B
	Gross Profit
1.77B	1.55B	1.28B	1.19B	1.04B
	EBIT
1.03B	790.10M	656.20M	590.30M	478.50M
	EBITDA
1.03B	879.50M	729.00M	652.50M	553.90M
	Net Income Common Stockholders
806.90M	590.10M	497.10M	464.00M	356.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
422.30M	69.10M	61.10M	36.50M	129.00M
	Total Assets
3.47B	2.80B	2.57B	2.17B	2.03B
	Total Debt
1.49B	1.53B	1.75B	1.44B	1.18B
	Net Debt
1.07B	1.47B	1.70B	1.41B	1.05B
	Total Liabilities
2.62B	2.51B	2.77B	2.44B	2.05B
	Stockholders Equity
850.20M	285.30M	-203.10M	-269.00M	-17.10M
Cash Flow		Free Cash Flow
782.10M	486.00M	201.20M	408.70M	533.90M
	Operating Cash Flow
945.70M	736.20M	302.30M	515.50M	612.40M
	Investing Cash Flow
-174.40M	-319.70M	-103.00M	-106.40M	-79.70M
	Financing Cash Flow
-418.60M	-406.20M	-174.10M	-498.70M	-441.80M

Lennox International Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 550.29
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LII, the sentiment is Negative. The current price of 550.29 is below the 20-day moving average (MA) of 564.66, below the 50-day MA of 585.40, and below the 200-day MA of 595.70, indicating a bearish trend. The MACD of -9.78 indicates Positive momentum. The RSI at 43.18 is Neutral, neither overbought nor oversold. The STOCH value of 26.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LII.

Lennox International Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JCI	76 Outperform	$52.04B	30.10	9.80%	1.88%	-4.53%	-14.72%
CSL	75 Outperform	$15.12B	18.87	32.60%	1.12%	-1.76%	176.01%
OC	71 Outperform	$12.09B	19.18	12.63%	1.82%	13.41%	-44.36%
CARR	70 Outperform	$52.50B	129.46	27.44%	1.31%	8.62%	163.53%
LII	69 Neutral	$19.97B	24.90	142.12%	0.81%	7.21%	36.45%
TT	68 Neutral	$76.89B	30.49	35.88%	1.01%	12.22%	28.13%
Sector *	62 Neutral	$7.68B	13.06	3.21%	3.34%	3.62%	-14.40%

Lennox International Corporate Events

Lennox International Announces Board of Directors Changes

Lennox International Inc. will see significant changes in its Board of Directors as long-serving members Janet K. Cooper and Gregory T. Swienton step down in May 2025. This move, prompted by Ms. Cooper’s choice not to seek re-election and Mr. Swienton reaching retirement age, will reduce the Board’s size by two, potentially impacting the company’s strategic direction.