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Lennox International (LII)
NYSE:LII
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Lennox International
(NYSE:LII)
74Outperform
Positive Factors
Commercial Growth
Full-year commercial growth of 6% was left unchanged due to good backlog visibility and price offsetting weaker volumes.
Residential Segment Performance
Residential segment results beat nicely with 7% price/mix and share gains.
Negative Factors
Demand Challenges
Consumer purchase intentions have likely decreased, which may contribute to ongoing challenges for Lennox International.
Organic Growth Concerns
Lennox's guidance for organic growth in 2025 is below consensus, indicating potential challenges in maintaining growth momentum.
Lennox International (LII) vs. S&P 500 (SPY)
Market Cap
$19.93B
Dividend Yield0.8%
Average Volume (3M)465.32K
Price to Earnings (P/E)25.0
Beta (1Y)1.01
Revenue Growth7.78%
EPS Growth30.10%
CountryUS
Employees14,200
SectorIndustrials
Sector Strength82
IndustryConstruction
Share Statistics
EPS (TTM)3.37
Shares Outstanding35,484,830
10 Day Avg. Volume577,264
30 Day Avg. Volume465,322
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.07
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit12.01
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$580.27Price Target Upside1.15% Upside
Rating ConsensusHold
Number of Analyst Covering13
Lennox International Business Overview & Revenue Model
Company DescriptionLennox International Inc. (LII) is a global leader in the heating, air conditioning, and refrigeration markets. The company designs, manufactures, and markets a broad range of products for the residential and commercial sectors. Its core offerings include climate control solutions such as HVAC systems, refrigeration units, and related components. Lennox International operates through three main business segments: Residential Heating & Cooling, Commercial Heating & Cooling, and Refrigeration, catering to a diverse clientele across North America and globally.
How the Company Makes MoneyLennox International makes money primarily through the sale of its HVAC and refrigeration products. The company's revenue streams are segmented into three main areas: Residential Heating & Cooling, Commercial Heating & Cooling, and Refrigeration. The Residential segment focuses on selling furnaces, air conditioners, heat pumps, and related equipment to homeowners and residential builders. The Commercial segment provides HVAC systems and services for office buildings, retail spaces, and other commercial facilities. The Refrigeration segment offers products for preserving and transporting perishable goods. Key factors contributing to Lennox's earnings include its extensive distribution network, strategic partnerships with distributors and contractors, and ongoing product innovation to meet energy efficiency and regulatory standards.
Lennox International Financial Statement Overview
Summary
Lennox International displays robust financial health with strong growth in revenue and profitability. The company demonstrates operational efficiency and effective cash flow management. While the balance sheet shows improvement, past equity challenges signal a need for cautious leverage management. Overall, Lennox International is well-positioned in the construction industry with a positive financial trajectory.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 | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 5.34B | 4.98B | 4.72B | 4.19B | 3.63B | Gross Profit |
| 1.77B | 1.55B | 1.28B | 1.19B | 1.04B | EBIT |
| 1.03B | 790.10M | 656.20M | 590.30M | 478.50M | EBITDA |
| 1.13B | 879.50M | 729.00M | 652.50M | 553.90M | Net Income Common Stockholders |
| 806.90M | 590.10M | 497.10M | 464.00M | 356.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 422.30M | 69.10M | 61.10M | 36.50M | 129.00M | Total Assets |
| 3.47B | 2.80B | 2.57B | 2.17B | 2.03B | Total Debt |
| 1.49B | 1.53B | 1.75B | 1.44B | 1.18B | Net Debt |
| 1.07B | 1.47B | 1.70B | 1.41B | 1.05B | Total Liabilities |
| 2.62B | 2.51B | 2.77B | 2.44B | 2.05B | Stockholders Equity |
| 850.20M | 285.30M | -203.10M | -269.00M | -17.10M |
| Cash Flow | Free Cash Flow | |||
| 782.10M | 486.00M | 201.20M | 408.70M | 533.90M | Operating Cash Flow |
| 945.70M | 736.20M | 302.30M | 515.50M | 612.40M | 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
Neutral
573.70
Price Trends
561.88
Positive
591.79
Negative
594.92
Negative
Market Momentum
2.88
Negative
56.99
Neutral
87.34
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 573.7 is above the 20-day moving average (MA) of 549.97, above the 50-day MA of 561.88, and below the 200-day MA of 594.92, indicating a neutral trend. The MACD of 2.88 indicates Negative momentum. The RSI at 56.99 is Neutral, neither overbought nor oversold. The STOCH value of 87.34 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $16.67B | 10.52 | 33.11% | 0.99% | -0.14% | 135.52% | |
79 Outperform | $58.63B | 34.11 | 14.92% | 1.61% | -8.39% | 51.56% | |
76 Outperform | $90.70B | 33.52 | 38.45% | 0.85% | 11.43% | 28.49% | |
75 Outperform | $12.20B | 19.60 | 11.93% | 1.89% | 16.16% | -77.11% | |
74 Outperform | $19.93B | 25.03 | 131.48% | 0.80% | 7.78% | 30.10% | |
71 Outperform | $60.17B | 16.25 | 25.69% | 1.11% | 0.14% | 202.13% | |
64 Neutral | $4.30B | 11.84 | 5.23% | 249.82% | 4.10% | -10.59% |
* Industrials Sector Average
Performance Comparison
LII
Lennox International
573.70
92.11
19.13%
CSL
Carlisle Companies
390.31
-20.45
-4.98%
TT
Trane Technologies
404.73
81.30
25.14%
JCI
Johnson Controls
91.92
27.13
41.87%
OC
Owens Corning
136.44
-36.54
-21.12%
CARR
Carrier Global
71.44
7.68
12.05%
Lennox International Earnings Call Summary
Earnings Call Date:Apr 23, 2025
(Q1-2025)
| % Change Since: 2.86%|
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 Corporate Events
Executive/Board Changes
Lennox International Announces Board of Directors Changes
Neutral
Dec 6, 2024
Lennox International Inc. will see significant changes in its Board of Directors as long-serving members Janet K. Cooper and Gregory T. Swienton step down in May 2025. This move, prompted by Ms. Cooper’s choice not to seek re-election and Mr. Swienton reaching retirement age, will reduce the Board’s size by two, potentially impacting the company’s strategic direction.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.