Lennox International (LII) AI Stock Analysis

• Market Cap: $18.33B
• Dividend Yield: 0.92%
• Average Volume (3M): 397.84K
• Price to Earnings (P/E): 22.1
• Beta (1Y): 1.01
• Revenue Growth: 7.92%
• EPS Growth: 29.72%
• Country: US
• Employees: 14,200
• Sector: Industrials
• Sector Strength: 72
• Industry: Construction
• EPS (TTM): 7.82
• Shares Outstanding: 35,124,283
• 10 Day Avg. Volume: 410,798
• 30 Day Avg. Volume: 397,837
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.19
• Enterprise Value/Revenue: 4.03
• Enterprise Value/Gross Profit: 12.17
• Enterprise Value/Ebitda: 18.85
• 1Y Price Target: $656.30
• Price Target Upside: 25.74% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 12

• Rating: 73 Outperform
• Price Target: $622.00 ▲(19.17% Upside)

Lennox International's strong financial performance and positive earnings call guidance are significant strengths, supporting a solid overall score. However, technical analysis indicates bearish trends, and valuation metrics suggest the stock is moderately priced, limiting upside potential.

Positive Factors

Revenue and Margin Growth

Lennox's ability to grow revenue and expand margins despite challenging conditions indicates strong operational efficiency and market resilience.

Strategic Partnerships

Partnerships with Samsung and Ariston are poised to strengthen Lennox's product offerings, supporting long-term growth and competitive positioning.

Improved Factory Productivity

Enhanced factory productivity reduces costs and enhances profitability, providing a buffer against inflation and supporting sustainable margins.

Negative Factors

Softness in New Construction

Weak demand in new residential construction could limit sales growth, affecting Lennox's revenue from this segment in the near term.

Refrigerant Canister Shortages

Supply chain issues with refrigerant canisters can disrupt sales and dealer relationships, impacting Lennox's ability to meet market demand.

Industry Destocking

Destocking of older equipment can lead to reduced sales volumes, pressuring Lennox's revenue and inventory management strategies.

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 generates revenue primarily through the sale of HVAC systems and related products across its three segments. The Residential Heating & Cooling segment contributes significantly to revenue by providing a wide range of heating and cooling systems for homes. The Commercial Heating & Cooling segment focuses on larger-scale HVAC solutions for businesses and commercial properties, while the Refrigeration segment offers products and services for the food service and retail industries. Additionally, Lennox earns revenue through service and maintenance contracts, as well as parts and accessories for its systems. The company's strong relationships with distributors and contractors enhance its market reach and sales, contributing to its overall earnings. Lennox also invests in research and development to innovate and improve product efficiency, which helps maintain its competitive edge and attract customers in a rapidly evolving industry.

Lennox International Financial Statement Overview

Summary

Lennox International shows strong financial performance with consistent revenue growth, robust profit margins, and solid cash flow management. However, the balance sheet indicates moderate leverage, which requires monitoring.

Income Statement

Lennox International has demonstrated strong revenue growth with a TTM (Trailing-Twelve-Months) revenue increase of 1.41% compared to the prior year. Gross profit margins are robust at 33.12%, and net profit margins have improved to 15.41%. The EBIT margin of 19.52% and EBITDA margin of 19.89% indicate strong operational efficiency. The steady revenue growth and healthy profit margins reflect a solid financial performance in the construction industry.

Balance Sheet

The company has managed to improve its stockholders' equity, which stands positive at $900.5 million as of the latest TTM data. The debt-to-equity ratio is 1.72, indicating a moderate level of leverage. The return on equity (ROE) is strong at 92.67%, due to the significant net income relative to equity. An equity ratio of 24.65% suggests a balanced approach to leveraging assets for growth. Overall, the balance sheet reflects improving financial stability, though attention to debt levels remains crucial.

Cash Flow

Lennox International exhibits strong cash flow management, with a free cash flow of $680.1 million for the TTM, marking a growth of -13.05% from the previous year. The operating cash flow to net income ratio is 1.00, indicating that operating cash flow fully supports net income. The free cash flow to net income ratio of 0.81 suggests solid cash conversion from earnings. While free cash flow has declined slightly, cash flow from operations remains robust, supporting ongoing investment and debt servicing.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.42B	5.34B	4.98B	4.72B	4.19B	3.63B
Gross Profit	1.79B	1.77B	1.55B	1.28B	1.19B	1.04B
EBITDA	1.16B	1.13B	879.50M	733.50M	658.50M	547.50M
Net Income	834.60M	806.90M	590.10M	497.10M	464.00M	356.30M
Balance Sheet
Total Assets	3.65B	3.47B	2.80B	2.57B	2.17B	2.03B
Cash, Cash Equivalents and Short-Term Investments	55.10M	422.30M	69.10M	61.10M	36.50M	129.00M
Total Debt	1.55B	1.49B	1.53B	1.75B	1.44B	1.18B
Total Liabilities	2.75B	2.62B	2.51B	2.77B	2.44B	2.05B
Stockholders Equity	900.50M	850.20M	285.30M	-203.10M	-269.00M	-17.10M
Cash Flow
Free Cash Flow	680.10M	782.10M	486.00M	201.20M	408.70M	533.90M
Operating Cash Flow	835.50M	945.70M	736.20M	302.30M	515.50M	612.40M
Investing Cash Flow	-168.80M	-174.40M	-319.70M	-103.00M	-106.40M	-79.70M
Financing Cash Flow	-668.50M	-418.60M	-406.20M	-174.10M	-498.70M	-441.80M

Lennox International Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 521.94
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 521.94 is below the 20-day moving average (MA) of 549.36, below the 50-day MA of 583.20, and below the 200-day MA of 586.73, indicating a bearish trend. The MACD of -15.25 indicates Positive momentum. The RSI at 31.36 is Neutral, neither overbought nor oversold. The STOCH value of 7.36 is Positive, 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
LII	73 Outperform	$18.33B	22.07	112.94%	0.92%	7.92%	29.72%
JCI	71 Outperform	69.72B	31.64	14.09%	1.43%	-13.10%	40.62%
TT	70 Outperform	89.92B	32.06	36.46%	0.90%	10.20%	24.57%
OC	69 Neutral	11.99B	37.80	6.45%	1.91%	13.08%	-67.65%
CARR	68 Neutral	50.20B	23.54	27.32%	1.47%	-5.24%	-33.37%
MAS	64 Neutral	14.99B	19.01	-947.06%	1.73%	-2.73%	-8.31%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%