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Lennox International (LII)
NYSE:LII
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Lennox International
(NYSE:LII)75Outperform
Positive Factors
Financial Performance
Lennox International's fourth quarter earnings per share significantly exceeded expectations, indicating strong financial performance.
Stock Rating Upgrade
Analyst upgrades the rating on LII to Overweight from Equal Weight, indicating increased confidence in the stock.
Negative Factors
Price Target Concern
The price target has been lowered from $630 to $580, reflecting concerns about trading at a discount compared to competitors.
Lennox International (LII) vs. S&P 500 (SPY)
Market Cap
$21.39B
Dividend Yield0.78%
Average Volume (3M)410.31K
Price to Earnings (P/E)26.7
Beta (1Y)1.34
Revenue Growth7.21%
EPS Growth36.45%
CountryUS
Employees14,200
SectorIndustrials
Sector Strength66
IndustryConstruction
Share Statistics
EPS (TTM)22.54
Shares Outstanding35,579,662
10 Day Avg. Volume402,498
30 Day Avg. Volume410,305
Financial Highlights & Ratios
PEG Ratio0.73
Price to Book (P/B)N/A
Price to Sales (P/S)4.00
Price to Cash Flow (P/CF)16.10
P/FCF Ratio15.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$640.50Price Target Upside11.79% Upside
Rating ConsensusHold
Number of Analyst Covering9
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 demonstrates strong financial health with significant revenue and profit growth, improved equity, and robust cash flow generation. However, the company carries notable debt levels that could pose risks if not managed properly.Income Statement
Lennox International has shown a strong revenue growth rate from 2023 to 2024, with revenues increasing from $4.98 billion to $5.34 billion, marking a growth of 7.2%. The company maintains robust profitability with a gross profit margin of 33.2% and a net profit margin of 15.1% in 2024. Additionally, both the EBIT and EBITDA margins are impressive at 19.4% for the same period, indicating operational efficiency.85
Very Positive
Balance Sheet
The company has improved its financial position with a positive stockholders' equity of $850.2 million in 2024, reversing negative equity in prior years. The debt-to-equity ratio stands at 1.75, reflecting a moderate level of leverage. The equity ratio improved to 24.5%, indicating a better balance between debt and equity financing. However, the company still carries significant debt levels, which could pose risks if not managed properly.70
Positive
Cash Flow
Lennox International's operating cash flow increased significantly to $945.7 million in 2024, with a strong free cash flow generation of $782.1 million. The free cash flow to net income ratio is 0.97, showing the company's ability to convert its profits into cash effectively. The operating cash flow to net income ratio is 1.17, highlighting strong cash flow generation capabilities. These positive cash flow metrics provide the company with flexibility for future investments and debt servicing.78
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 |
| 1.03B | 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
Negative
572.97
Price Trends
618.53
Negative
623.02
Negative
587.27
Negative
Market Momentum
-7.02
Positive
36.08
Neutral
12.14
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LII, the sentiment is Negative. The current price of 572.97 is below the 20-day moving average (MA) of 605.87, below the 50-day MA of 618.53, and below the 200-day MA of 587.27, indicating a bearish trend. The MACD of -7.02 indicates Positive momentum. The RSI at 36.08 is Neutral, neither overbought nor oversold. The STOCH value of 12.14 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $53.41B | 30.89 | 11.01% | 1.79% | -4.53% | -14.72% | |
75 Outperform | $21.39B | 26.67 | 94.91% | 0.78% | 7.21% | 36.45% | |
70 Outperform | $55.99B | 138.05 | 23.17% | 1.26% | 8.62% | 163.53% | |
68 Neutral | $79.33B | 31.46 | 0.05% | 0.97% | 12.22% | 28.13% | |
63 Neutral | $9.54B | 18.32 | 28.33% | 1.99% | -0.90% | -1.69% | |
62 Neutral | $32.83B | 39.55 | 8.24% | 0.10% | 5.22% | 8.01% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% |
* Industrials Sector Average
Performance Comparison
LII
Lennox International
572.97
101.73
21.59%
TT
Trane Technologies
343.20
58.89
20.71%
JCI
Johnson Controls
80.90
21.63
36.49%
AOS
A. O. Smith Corporation
65.61
-17.45
-21.01%
IR
Ingersoll Rand
81.45
-8.73
-9.68%
CARR
Carrier Global
62.07
5.04
8.84%
Lennox International Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -13.53% | Next Earnings Date: Apr 28, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance in 2024 with record revenue, earnings, and cash flow, driven by strategic initiatives and a successful refrigerant transition. However, challenges such as prebuy revenue headwinds and higher product costs due to factory ramp-up were noted. Despite these challenges, the outlook remains positive with continued investments and strategic focus.Highlights
Record-Breaking Revenue and Growth
For the first time, Lennox delivered over $5 billion in revenue and over $1 billion in adjusted segment profit. Core revenue grew 22% in Q4 and 13% for the full year. Adjusted earnings per share reached a record $5.60 for the quarter and $22.58 for the full year.
Significant Margin Expansion
Adjusted segment margin expanded by 250 basis points in Q4 and 150 basis points for the full year to 19.4%.
Robust Operating Cash Flow
The company delivered a record $332 million in operating cash flow in Q4 and $946 million for the full year.
Successful Strategic Initiatives
The completion of the initial phase of the self-help transformation plan contributed to restored margins and established a strong foundation for 2024.
New Commercial Factory Online
The new commercial factory is now operational, expected to enhance output and productivity.
Eighth Consecutive Quarter of Double-Digit EPS Growth
Achieved 54% adjusted EPS growth, driven by volume growth and effective management of refrigerant transition.
Lowlights
Prebuy Revenue Headwinds
The R-410A equipment prebuy is expected to result in a $125 million revenue headwind in Q1 2025, affecting year-over-year comparisons in both Q1 and Q4.
Higher Product Costs
The Building Climate Solutions segment experienced a decline in profit margin due to $20 million in higher product costs related to new factory ramp-up activities.
Uncertainty in Market Conditions
Uncertain macroeconomic factors such as interest rates, inflation, and tariffs could potentially impact future performance.
Company Guidance
In the Lennox earnings call for the fourth quarter and full year 2024, significant metrics and guidance were discussed. The company reported a record $5 billion in revenue and over $1 billion in adjusted segment profit for the first time. Adjusted earnings per share reached $5.60 for Q4 and $22.58 for the full year. Core revenue grew by 22% in the quarter and 13% for the year. The adjusted segment margin expanded by 250 basis points in Q4 and 150 basis points for the full year, reaching 19.4%. Operating cash flow also set records, with $332 million in Q4 and $946 million for the year. Looking ahead to 2025, Lennox anticipates total company core revenue growth of approximately 2%, with adjusted earnings per share projected between $22 and $23.50, and free cash flow expected to range from $650 million to $800 million. The company also plans strategic investments of around $25 million to enhance information systems, distribution growth, and customer service.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.