Lennox International Stock Falls Despite Q1 Beat & Improved Outlook

Lennox International (NYSE: LII) reported stronger-than-expected Q1 results, topping both earnings and revenue estimates driven by robust performances in its Residential and Refrigeration businesses. On top of that, the company raised its revenue growth outlook for Fiscal 2022.

Despite the beat and raised revenue outlook, shares of the provider of climate control products for the heating, ventilation, air conditioning, and refrigeration markets declined 3.2% on April 25 to close at $238.94. The stock is extending those losses today, as it is currently down almost 5%.

Q1 Earnings and Revenue Beat

Adjusted earnings of $2.36 per share grew 4% year-over-year and massively beat analysts’ expectations of $1.98 per share. The company reported earnings of $2.27 per share in the prior-year period.

Further, revenues jumped 9% year-over-year to $1.01 billion and exceeded consensus estimates of $952.8 million.

The increase in revenues reflected a surge in Residential revenues, which increased 13% to $682 million, and 15% growth in Refrigeration revenues to $144 million, offsetting a 6% decline in Commercial revenue to $188 million.

Improved FY2022 Outlook

Based on robust Q1 results, management raised its revenue guidance for FY2022.

The company now forecasts revenues to grow in the range of 7-11%, versus the prior guidance of 5-10%.

The company continues to forecast adjusted earnings in the range of $13.50 to $14.50 per share, while the consensus estimate is pegged at $14.09 per share.

CEO Comments

Lennox’s Interim CEO Todd Teske commented, “Looking ahead for the company overall, demand remains strong, and we have announced a second round of price increases for 2022 to continue to offset broad inflationary pressures.”

Wall Street’s Take

Following upbeat Q1 results, Morgan Stanley analyst Joshua Pokrzywinski increased the price target on Lennox International to $254 (11.5% upside potential) from $253 and reiterated a Hold rating.

Consensus among analysts is a Hold based on one Buy, eight Holds, and two Sell ratings assigned in the past three months. The average Lennox International stock forecast of $269.18 implies 18.2% upside potential from current levels.

Investors Weigh In

Positively, the TipRanks’ Stock Investors tool shows that investors who hold a portfolio on TipRanks currently have a Very Positive stance on Lennox International, with 19.8% of investors increasing their exposure to LII stock over the past 30 days.

Conclusion

Lennox International shares have lost more than 30% of their market capitalization in the past year.

With the positive indication of an improved revenue outlook and strong TipRanks retail investor sentiment, the current share price levels could offer an attractive entry point.

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