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Lennox International (LII)
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Lennox International (LII) AI Stock Analysis

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LII

Lennox International

(NYSE:LII)

Rating:74Outperform
Price Target:
$744.00
â–²(12.59%Upside)
Lennox International's strong financial performance and positive earnings call sentiment are significant strengths, but these are moderated by technical indicators suggesting possible short-term volatility and a high valuation. The company's strategic partnerships and raised guidance support long-term growth potential despite current challenges.
Positive Factors
Earnings
A very strong Q2 margin beat was driven by price/mix vastly outpacing cost, resulting in an increase in expected earnings projections.
Joint Venture
Lennox announced a joint venture with Ariston Group to sell residential water heaters by leveraging the Lennox brand and distribution.
Market Strategy
Analyst's recommendation is supported by Lennox's strategy to recapture market share and drive margin expansion.
Negative Factors
Commercial Segment
Shares are down 9% as commercial segment revenue and profits missed expectations.
Demand Uncertainty
There is uncertainty in the Heating, Cooling, and Solutions market due to a consumer shift from replacing to repairing, influenced by sharp inflation.
Market Concerns
Analysts remain underweight on Lennox International and are lowering the price target to $450 due to continued concerns about organic downside in 2025.

Lennox International (LII) vs. SPDR S&P 500 ETF (SPY)

Lennox International Business Overview & Revenue Model

Company DescriptionLennox 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 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:Jul 23, 2025
(Q2-2025)
|
% Change Since: 6.59%|
Next Earnings Date:Oct 27, 2025
Earnings Call Sentiment Positive
The earnings call outlined solid financial performance with revenue and margin growth, strategic partnerships, and raised guidance. However, challenges such as softness in new construction, refrigerant canister shortages, and inflationary pressures were noted. Overall, the positive aspects slightly outweighed the negative challenges.
Q2-2025 Updates
Positive Updates
Revenue and Margin Growth
Revenue grew by 3% and segment margin reached a record 23.6%, with an increase of 170 basis points. Adjusted earnings per share in the second quarter was $7.82.
Home Comfort Solutions Segment Performance
HCS achieved a 3% revenue increase despite volume softness, with a 12% rise in pricing and favorable product mix.
Building Climate Solutions Segment Rebound
BCS revenue increased by 5%, supported by an 8% favorable product mix and pricing benefit, despite volume declines.
Joint Ventures and Strategic Partnerships
Joint ventures with Samsung and Ariston are expected to contribute to growth in 2026 and 2027, enhancing product offerings and customer experience.
Capital Deployment and Share Repurchase
Repurchased $300 million in shares year-to-date and received authorization for an additional $1 billion in future share repurchases.
Raised Full-Year Guidance
Full-year EPS guidance increased to $23.25 to $24.25 from $22.25 to $23.50, and revenue growth guidance raised to 3% from 2%.
Negative Updates
Softness in New Construction
Ongoing challenges include softness in new construction demand, which has impacted overall performance.
Refrigerant Canister Shortages
Shortages of R-454B refrigerant canisters affected sales and installations, creating uncertainty in the market.
Volume Declines
Sales volumes declined in both HCS and BCS segments, with HCS volumes down due to destocking and BCS facing soft end market demand.
Inflationary Pressures
Persistent inflationary pressures on materials and components impacted cost structures, though partially mitigated by tariff mitigation and productivity improvements.
Company Guidance
During the Lennox second-quarter earnings call for fiscal year 2025, the company reported a 3% increase in revenue and a record segment margin of 23.6%, up 170 basis points. Operating cash flow totaled $87 million, while adjusted earnings per share reached $7.82. Despite challenges such as new construction demand softness, refrigerant shortages, and inflationary pressures, Lennox raised its full-year outlook, anticipating adjusted EPS between $23.25 and $24.25 and revenue growth of approximately 3%. The transition to low GWP R-454B products was highlighted, with approximately 90% of refrigerant-based sales now using R-454B. The company also discussed strategic joint ventures with Samsung and Ariston aimed at portfolio expansion and future growth, with expectations for meaningful contributions from Samsung and Ariston starting in 2026 and 2027, respectively.

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 debt-to-equity ratio indicates a moderate level of leverage that needs close attention.
Income Statement
85
Very Positive
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
70
Positive
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
78
Positive
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue5.34B4.98B4.72B4.19B3.63B
Gross Profit1.77B1.55B1.28B1.19B1.04B
EBITDA1.13B879.50M729.00M652.50M553.90M
Net Income806.90M590.10M497.10M464.00M356.30M
Balance Sheet
Total Assets3.47B2.80B2.57B2.17B2.03B
Cash, Cash Equivalents and Short-Term Investments422.30M69.10M61.10M36.50M129.00M
Total Debt1.49B1.53B1.75B1.44B1.18B
Total Liabilities2.62B2.51B2.77B2.44B2.05B
Stockholders Equity850.20M285.30M-203.10M-269.00M-17.10M
Cash Flow
Free Cash Flow782.10M486.00M201.20M408.70M533.90M
Operating Cash Flow945.70M736.20M302.30M515.50M612.40M
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
Positive
Last Price660.82
Price Trends
50DMA
582.60
Positive
100DMA
571.72
Positive
200DMA
596.09
Positive
Market Momentum
MACD
20.55
Negative
RSI
72.25
Negative
STOCH
73.02
Neutral
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 660.82 is above the 20-day moving average (MA) of 610.64, above the 50-day MA of 582.60, and above the 200-day MA of 596.09, indicating a bullish trend. The MACD of 20.55 indicates Negative momentum. The RSI at 72.25 is Negative, neither overbought nor oversold. The STOCH value of 73.02 is Neutral, 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 (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$68.10B18.2725.69%1.07%0.14%202.13%
74
Outperform
$23.34B28.41112.94%0.72%7.92%29.72%
74
Outperform
$18.58B24.8133.11%0.92%-0.14%11.31%
74
Outperform
$12.28B52.5211.93%1.85%16.16%-77.11%
73
Outperform
$72.40B29.3414.92%1.32%-8.39%51.56%
72
Outperform
$102.97B38.2238.45%0.75%11.43%28.49%
68
Neutral
4.54B10.0512.94%317.29%4.42%4.61%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LII
Lennox International
660.82
95.88
16.97%
CSL
Carlisle Companies
435.11
13.17
3.12%
TT
Trane Technologies
472.07
143.34
43.60%
JCI
Johnson Controls
111.73
43.64
64.09%
OC
Owens Corning
145.90
-33.34
-18.60%
CARR
Carrier Global
80.73
13.93
20.85%

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.Date of analysis: Jul 25, 2025