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Lennox International (LII)
:LII
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Lennox International
(NYSE:LII)
Rating:75Outperform
Price Target:
$635.00
▲(5.09%Upside)
Positive Factors
Joint Venture
Lennox announced a joint venture with Ariston Group to sell residential water heaters by leveraging the Lennox brand and distribution.
Market Potential
Wholesale water heaters is a $10 billion market in the United States, and Lennox has the potential to carve out a 5% market share.
Residential Segment Performance
Residential results impressed, with 7% price/mix and share gains.
Negative Factors
Analyst Downgrade
Analysts remain underweight on Lennox International and are lowering the price target to $450 due to continued concerns about organic downside in 2025.
Commercial Segment Performance
Shares are down 9% as commercial segment revenue and profits missed expectations.
Consumer Demand Concerns
Consumer purchase intentions have likely decreased, which may contribute to ongoing challenges for Lennox International.
Lennox International (LII) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$21.44B
Dividend Yield0.86%
Average Volume (3M)363.71K
Price to Earnings (P/E)26.9
Beta (1Y)1.02
Revenue Growth7.78%
EPS Growth30.10%
CountryUS
Employees14,200
SectorIndustrials
Sector Strength86
IndustryConstruction
Share Statistics
EPS (TTM)3.37
Shares Outstanding35,484,830
10 Day Avg. Volume349,293
30 Day Avg. Volume363,709
Financial Highlights & Ratios
PEG Ratio1.48
Price to Book (P/B)-42.05
Price to Sales (P/S)0.00
P/FCF Ratio42.45
Enterprise Value/Market Cap0.48
Enterprise Value/Revenue0.49
Enterprise Value/Gross Profit5.82
Enterprise Value/Ebitda2.42
Forecast
1Y Price Target
$579.78Price Target Upside-4.04% Downside
Rating ConsensusHold
Number of Analyst Covering11
Lennox International Business Overview & Revenue Model
Company DescriptionLennox International Inc. (LII) is a global leader in the heating, ventilation, air conditioning, and refrigeration (HVACR) industry. The company designs, manufactures, and markets a broad range of products for the residential and commercial markets. Key offerings include energy-efficient furnaces, air conditioners, heat pumps, and refrigeration systems. Lennox International operates through three main segments: Residential Heating & Cooling, Commercial Heating & Cooling, and Refrigeration.
How the Company Makes MoneyLennox International makes money primarily through the sale of HVACR products and services. The Residential Heating & Cooling segment generates revenue by selling HVAC systems and related components to homeowners, often through a network of dealers and distributors. The Commercial Heating & Cooling segment focuses on providing HVAC solutions to businesses, including packaged rooftop units, split systems, and advanced control systems. The Refrigeration segment offers refrigeration products for the food, beverage, and medical industries, contributing to the company's revenue. Additionally, Lennox International benefits from service contracts, maintenance plans, and sales of replacement parts, which provide a steady source of recurring income. The company's earnings are further supported by its focus on innovation, energy efficiency, and strong relationships with suppliers and distributors.
Lennox International Earnings Call Summary
Earnings Call Date:Apr 23, 2025
(Q1-2025)
| % Change Since: 8.58%|
Next Earnings Date:Jul 28, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mix of positive and negative aspects. While the company has achieved growth in revenue and successful product transitions, it faces challenges with declining segment margins, BCS revenue decline, and increased cost inflation due to tariffs. The sentiment is balanced with both achievements and challenges.Q1-2025 Updates
Positive Updates
Revenue Growth
The company reported a 2% growth in revenue for the first quarter, driven by favorable mix initiatives from the new R-454B products.
Successful Transition to New Products
Approximately 50% of equipment sales in the quarter were the new R-454B product, with price yields in line with the 10% expectation.
Strong Financial Position
The company maintained a strong balance sheet with net debt to adjusted EBITDA at 0.8 times, an improvement from 1.4 times in the prior year quarter.
Emergency Replacement Initiative Progress
The emergency replacement initiative is showing steady progress, driving growth in the Building Climate Solutions segment.
Resilient Profit Margins
Continued efforts to expand profit margins through pricing, productivity, and mix optimization.
Negative Updates
Segment Margin Decline
Segment margin decreased by 140 basis points to 14.5% due to short-term inefficiencies related to manufacturing transition and new factory start-up.
BCS Revenue Decline
Building Climate Solutions segment experienced a 6% decline in revenue, with sales volumes down 9% due to expected destocking and delays in customer orders.
Tariff and Inflation Challenges
Total cost inflation is now expected to be 9%, up from previous guidance of 3%, driven by tariffs and secondary effects, impacting profitability.
Lower Sales Volume Expectations
Sales volumes are now anticipated to decrease by 4% compared to the previous guidance of a 2% increase, due to macroeconomic weakness and BCS order delays.
Company Guidance
During Lennox's Q1 2025 earnings call, the company provided detailed guidance and updated their full-year financial expectations. Lennox achieved a 2% revenue growth, despite challenges like a 140 basis point drop in segment margin, resulting in operating cash usage of $36 million, typical for the season. Adjusted earnings per share (EPS) for the quarter were reported at $3.37. The company has adjusted its full-year EPS guidance to a range of $22.25 to $23.50, in light of tariff impacts and other economic factors. Lennox anticipates a 9% total cost inflation due to tariffs, up from a previous 3% estimate, and has implemented price increases to counteract these costs, expecting price gains to reach 7%. The Home Comfort Solutions segment saw a 7% sales increase, while Building Climate Solutions faced a 6% revenue decline, partly due to destocking and product transitions. Lennox continues to focus on strategic initiatives like the emergency replacement growth and mitigating tariff impacts through pricing adjustments and supply chain enhancements.Lennox International Financial Statement Overview
Summary
Lennox International demonstrates robust financial health with strong revenue growth, improved profitability, and efficient cash management. However, the balance sheet reflects past equity challenges requiring cautious leverage management.Income Statement
Lennox International shows strong and consistent growth in revenue with a notable increase of 13.78% from 2023 to 2024 and 8.6% from 2022 to 2023. The company maintains healthy gross profit margins at 32.8% in TTM, driven by efficient operations. Net profit margins improved to 14.96% in TTM, reflecting enhanced profitability. EBIT and EBITDA margins are robust at 19.06% and 19.87% respectively, indicating strong operational efficiency.88
Very Positive
Balance Sheet
The company's debt-to-equity ratio of 1.75 in TTM is moderate, suggesting manageable leverage, though equity is relatively low compared to assets, with an equity ratio of 24.67%. Return on equity is impressive at 94.19% due to efficient earnings generation. However, the negative stockholders' equity in previous years indicates past financial challenges.70
Positive
Cash Flow
Lennox International's free cash flow growth is strong with a 59.12% increase from 2022 to 2023, showcasing effective cash management. The operating cash flow to net income ratio of 1.16 indicates solid cash generation relative to earnings. The free cash flow to net income ratio of 0.96 suggests nearly all earnings are being converted to free cash flow.82
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.37B | 5.34B | 4.98B | 4.72B | 4.19B | 3.63B |
| Gross Profit | 1.76B | 1.77B | 1.55B | 1.28B | 1.19B | 1.04B |
| EBITDA | 1.07B | 1.13B | 879.50M | 729.00M | 652.50M | 553.90M |
| Net Income | 802.90M | 806.90M | 590.10M | 497.10M | 464.00M | 356.30M |
Balance Sheet | ||||||
| Total Assets | 3.46B | 3.47B | 2.80B | 2.57B | 2.17B | 2.03B |
| Cash, Cash Equivalents and Short-Term Investments | 222.90M | 422.30M | 69.10M | 61.10M | 36.50M | 129.00M |
| Total Debt | 1.49B | 1.49B | 1.53B | 1.75B | 1.44B | 1.18B |
| Total Liabilities | 2.60B | 2.62B | 2.51B | 2.77B | 2.44B | 2.05B |
| Stockholders Equity | 852.50M | 850.20M | 285.30M | -203.10M | -269.00M | -17.10M |
Cash Flow | ||||||
| Free Cash Flow | 773.10M | 782.10M | 486.00M | 201.20M | 408.70M | 533.90M |
| Operating Cash Flow | 932.70M | 945.70M | 736.20M | 302.30M | 515.50M | 612.40M |
| Investing Cash Flow | -167.20M | -174.40M | -319.70M | -103.00M | -106.40M | -79.70M |
| Financing Cash Flow | -602.20M | -418.60M | -406.20M | -174.10M | -498.70M | -441.80M |
Lennox International Technical Analysis
Positive
604.22
Price Trends
563.48
Positive
570.84
Positive
594.89
Positive
Market Momentum
8.36
Negative
69.72
Neutral
94.82
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LII, the sentiment is Positive. The current price of 604.22 is above the 20-day moving average (MA) of 561.07, above the 50-day MA of 563.48, and above the 200-day MA of 594.89, indicating a bullish trend. The MACD of 8.36 indicates Negative momentum. The RSI at 69.72 is Neutral, neither overbought nor oversold. The STOCH value of 94.82 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LII.
Lennox International Risk Analysis
Lennox International disclosed 20 risk factors in its most recent earnings report. Lennox International reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Lennox International Peers Comparison
Overall Rating
UnderperformOutperform
Sector (71)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $97.55B | 36.39 | 38.45% | 0.87% | 11.43% | 28.49% | |
81 Outperform | $64.86B | 17.36 | 25.69% | 1.20% | 0.14% | 202.13% | |
75 Outperform | $21.44B | 26.93 | 131.48% | 0.86% | 7.78% | 30.10% | |
73 Outperform | $70.22B | 28.46 | 14.92% | 1.41% | -8.39% | 51.56% | |
72 Outperform | $12.35B | 52.15 | 11.93% | 1.90% | 16.16% | -77.11% | |
72 Outperform | $17.21B | 22.98 | 33.11% | 1.01% | -0.14% | 11.31% | |
71 Outperform | ¥254.55B | 13.00 | 8.49% | 3.09% | 6.31% | 12.77% |
* Industrials Sector Average
Performance Comparison
LII
Lennox International
604.22
65.49
12.16%
CSL
Carlisle Companies
397.81
-8.27
-2.04%
TT
Trane Technologies
437.39
107.00
32.39%
JCI
Johnson Controls
106.71
40.65
61.53%
OC
Owens Corning
145.26
-19.52
-11.85%
CARR
Carrier Global
75.65
12.90
20.56%
Lennox International Corporate Events
Executive/Board ChangesShareholder Meetings
Lennox International Elects Tracy A. Embree to Board
Neutral
May 27, 2025
On May 22, 2025, Lennox International announced the election of Tracy A. Embree to its Board of Directors as a Class III Director, effective June 1, 2025. Ms. Embree, with extensive leadership experience from Otis Americas and Cummins Inc., will also join the Board Governance and Compensation and Human Resources Committees. Her compensation aligns with the company’s standard for non-employee directors. The Board confirmed her independence and lack of related party transactions requiring disclosure. Additionally, during the company’s Annual Meeting, stockholders voted on three proposals: electing two Class III Directors, approving executive compensation, and ratifying Ernst & Young LLP as the independent auditor for 2025. All proposals received significant approval, with the advisory vote on executive compensation achieving approximately 93% support.
The most recent analyst rating on (LII) stock is a Buy with a $600.00 price target. To see the full list of analyst forecasts on Lennox International stock, see the LII Stock Forecast page.
Private Placements and FinancingBusiness Operations and Strategy
Lennox International Amends Credit Facility Agreement
Neutral
May 14, 2025
On May 9, 2025, Lennox International Inc. amended its existing unsecured revolving credit facility with JPMorgan Chase Bank and other lenders. The amendment decreased the total revolving commitments from $1.1 billion to $1 billion, with an option to increase by up to $350 million, and extended the maturity date from July 2026 to May 2030, impacting the company’s financial flexibility and long-term planning.
The most recent analyst rating on (LII) stock is a Buy with a $600.00 price target. To see the full list of analyst forecasts on Lennox International stock, see the LII Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.