Lennox International (LII) AI Stock Analysis

• Market Cap: $17.17B
• Dividend Yield: 1%
• Average Volume (3M): 506.82K
• Price to Earnings (P/E): 20.7
• Beta (1Y): 1.02
• Revenue Growth: 3.77%
• EPS Growth: 12.46%
• Country: US
• Employees: 14,200
• Sector: Industrials
• Sector Strength: 72
• Industry: Construction
• EPS (TTM): 6.98
• Shares Outstanding: 35,072,780
• 10 Day Avg. Volume: 399,254
• 30 Day Avg. Volume: 506,820
• PEG Ratio: 0.74
• Price to Book (P/B): 25.51
• Price to Sales (P/S): 4.06
• P/FCF Ratio: 27.73
• Enterprise Value/Market Cap: 1.16
• Enterprise Value/Revenue: 3.73
• Enterprise Value/Gross Profit: 11.20
• Enterprise Value/Ebitda: 16.66
• 1Y Price Target: $599.00
• Price Target Upside: 22.38% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 12
• EPS Forecast (FY): 22.98
• Revenue Forecast (FY): $5.28B

• Rating: 64 Neutral
• Price Target: $478.00 ▼(-2.34% Downside)

Lennox International's overall stock score reflects a solid financial performance with strong profitability and effective equity utilization. However, high leverage and declining free cash flow growth pose risks. Technical indicators suggest bearish momentum, and valuation metrics indicate moderate pricing. The earnings call highlighted both achievements and challenges, with a cautious outlook for the near term but optimism for 2026.

Positive Factors

Segment Margin Strength

The record segment margin of 21.7% indicates strong operational efficiency and cost management, which can sustain profitability even in challenging market conditions.

Acquisition Strategy

Strategic acquisitions enhance market position and offer growth opportunities, potentially leading to increased revenue and profitability in the long term.

BCS Segment Growth

The BCS segment's margin expansion and revenue growth demonstrate strong market demand and effective strategic initiatives, supporting long-term business growth.

Negative Factors

Revenue Decline

A 5% revenue decline reflects market challenges and could impact future earnings if not addressed, highlighting the need for strategic adjustments.

High Leverage

High leverage can limit financial flexibility and increase risk, especially in volatile markets, potentially affecting long-term financial health.

Declining Free Cash Flow

A decline in free cash flow growth may constrain investment capacity and operational flexibility, posing risks to long-term growth and stability.

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 through the sale of a diverse array of HVACR products and services. The primary revenue streams include the sale of residential and commercial heating and cooling equipment, which encompasses air conditioners, furnaces, heat pumps, and related components. Additionally, the company offers aftermarket services and parts, which contribute significantly to its earnings by providing ongoing maintenance and support to customers. Strategic partnerships with contractors, distributors, and retailers enhance Lennox's market reach, allowing it to penetrate various geographical regions and customer segments. Furthermore, the company's investment in energy-efficient technologies and smart home solutions positions it well in a market increasingly focused on sustainability and innovation, driving customer demand and revenue growth.

Lennox International Financial Statement Overview

Summary

Lennox International demonstrates strong profitability with a consistent gross profit margin and improving net profit margin. However, the high debt-to-equity ratio and decline in free cash flow growth present potential risks.

Income Statement

Lennox International shows strong profitability with a consistent gross profit margin around 33% and a net profit margin improving to 15.7% in the TTM. Despite a slight revenue decline in the TTM, the company has demonstrated resilience with stable EBIT and EBITDA margins. The revenue growth rate has been volatile, indicating potential market challenges.

Balance Sheet

The balance sheet reflects a high debt-to-equity ratio of 1.13 in the TTM, indicating significant leverage, though improved from previous years. Return on equity is robust at 91.6%, showcasing effective use of equity. However, the equity ratio is low, suggesting reliance on debt financing, which could pose risks in volatile markets.

Cash Flow

Cash flow analysis reveals a decline in free cash flow growth by 21.4% in the TTM, yet the company maintains a healthy free cash flow to net income ratio of 78.1%. The operating cash flow to net income ratio is moderate at 60.6%, indicating decent cash generation relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.35B	5.34B	4.98B	4.72B	4.19B	3.63B
Gross Profit	1.78B	1.77B	1.55B	1.28B	1.19B	1.04B
EBITDA	1.20B	1.13B	879.50M	733.50M	658.50M	547.50M
Net Income	841.40M	806.90M	590.10M	497.10M	464.00M	356.30M
Balance Sheet
Total Assets	3.52B	3.47B	2.80B	2.57B	2.17B	2.03B
Cash, Cash Equivalents and Short-Term Investments	59.20M	422.30M	69.10M	61.10M	36.50M	129.00M
Total Debt	1.21B	1.49B	1.53B	1.75B	1.44B	1.18B
Total Liabilities	2.45B	2.62B	2.51B	2.77B	2.44B	2.05B
Stockholders Equity	1.07B	850.20M	285.30M	-203.10M	-269.00M	-17.10M
Cash Flow
Free Cash Flow	534.30M	782.10M	486.00M	201.20M	408.70M	533.90M
Operating Cash Flow	684.10M	945.70M	736.20M	302.30M	515.50M	612.40M
Investing Cash Flow	-153.90M	-174.40M	-319.70M	-103.00M	-106.40M	-79.70M
Financing Cash Flow	-718.60M	-418.60M	-406.20M	-174.10M	-498.70M	-441.80M

Lennox International Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 489.46
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LII, the sentiment is Neutral. The current price of 489.46 is above the 20-day moving average (MA) of 478.17, below the 50-day MA of 505.26, and below the 200-day MA of 558.12, indicating a neutral trend. The MACD of -6.68 indicates Negative momentum. The RSI at 51.16 is Neutral, neither overbought nor oversold. The STOCH value of 89.07 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LII.

Lennox International Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JCI	70 Outperform	$71.08B	23.12	11.86%	1.31%	-10.19%	100.65%
TT	67 Neutral	$90.95B	31.57	37.07%	0.89%	8.58%	20.37%
LII	64 Neutral	$17.17B	20.66	92.25%	1.00%	3.77%	12.46%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
CARR	63 Neutral	$45.69B	21.77	9.44%	1.66%	-7.93%	-35.00%
MAS	53 Neutral	$13.08B	16.14	―	1.91%	-3.62%	3.41%
OC	51 Neutral	$9.31B	―	-3.27%	2.43%	3.47%	-148.53%

Lennox International Corporate Events

Lennox International Reports Mixed Q3 Results

Lennox International, a prominent player in the energy-efficient climate-control solutions sector, offers a diverse range of HVAC systems and services for both residential and commercial clients, emphasizing sustainability and innovation.

Lennox International’s Earnings Call: Mixed Results and Optimistic Outlook

Lennox International’s recent earnings call painted a mixed picture of the company’s financial health and strategic direction. While the company celebrated record achievements in segment margins and earnings per share, it also faced notable challenges such as revenue declines and inventory issues. The company’s acquisition strategy appears promising, yet it had to revise its full-year guidance downwards. Looking ahead, Lennox remains optimistic about 2026, expecting market recovery and growth from acquisitions and new product introductions.