Shares of energy-efficient climate control solutions provider Lennox International, Inc. (LII) have slid 14.8% so far this year. The company’s recent fourth-quarter performance came in ahead of expectations on both its top-line and bottom-line fronts.
Despite COVID-19 and global supply chain constraints, revenue increased 5.6% year-over-year to $964.8 million, outperforming estimates by $9.9 million. Earnings per share at $2.35 too, handily beat estimates by $0.36.
During this period, while Residential and Refrigeration verticals witnessed growth, Commercial business continued to see the impact of COVID-19 and supply chain bottlenecks.
The company expects Commercial business to resume growth in the first quarter. Further, Lennox has recently also introduced a cold climate heat pump that is focused on environmental sustainability.
With these developments in mind, let us take a look at the changes in Lennox’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Lennox’s top risk category is Macro & Political, contributing 5 of the total 19 risks identified for the stock, compared to a sector average of 4 risk factors under the same category.
However, in its recent report, the company has added one key risk factor under the Production risk category.
Lennox highlighted that it has seen and may continue to witness higher employee turnover and absenteeism due to a variety of factors, including COVID-19. Additionally, various factors can affect the available labor force, which can decrease the available talent for certain functions.
The company also noted that at the end of December, 24% of its workforce was unionized. Labor shortages, work stoppages, turnover, labor cost increases, or other problems related to labor relations could adversely impact the company.
Hedge Fund Activity
According to TipRanks data, the Wall Street’s top hedge funds have decreased holdings in Lennox by 31.2 thousand shares in the last quarter, indicating a negative hedge fund confidence signal in the stock based on activities of 6 hedge funds. Notably, Ray Dalio’s Bridgewater Associates has a holding worth ~$11.17 million in Lennox.
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