Lennox International (LII)
Industrials · $11.8B market cap · SEC CIK 0001069202
ahead of 45% of the S&P 500 · #39 of 79 in Industrials
Next reports on Jan 26, 2027, after the close, with analysts expecting $3.52 in earnings per share.
52-week range $322.00 to $587.27. 41% below its 52-week high and 8% above its low.
The case for LII
- Earns 62% on shareholder equity.
- Reasonably priced for its growth: 15.3× earnings, where 10% a year of growth plus a 1.1% dividend would justify about 24×.
- Pays a modest 1.1% dividend.
The case against
- Down 29.0% over the past year.
- Earnings per share fell 6.7%.
- Near the bottom of its 52-week range, 41% below the high. Falling prices usually have a reason; find it first.
- Long-term debt of $1.1B against $34.2M of cash.
- Revenue grew only 1.9%, roughly the pace of inflation.
What the score is made of
Each factor is half a curve over reported figures and half a rank among the other Industrials companies (momentum is judged against fixed thresholds only), and the five are blended by weight. The score is where that blend places it in the S&P 500. It describes the last filing and the current price. It is not a forecast.
| Valuewhat you pay for the earnings and cash, against the growth you get | 78 |
|---|---|
| Growthhow fast revenue and earnings are moving, this year and over five | 45 |
| Profitabilityhow much of the revenue becomes profit, and how much of that is cash | 69 |
| Momentumhow the price has behaved lately | 15 |
| Stabilityhow violently it moves, what it owes and what it pays you | 58 |
- Each factor except momentum is half fixed thresholds, half rank among the 79 Industrials companies.
The financials
Revenue growth
Is the business growing? Slowly
| Last 12 months | +1.9% |
|---|---|
| Over 5 years | +7.4% a year |
| FY2025 revenue | $5.2B (−3%) |
Free cash flow
Is it generating real cash? Yes
| FY2025 free cash flow | $639M |
|---|---|
| Of revenue | 12% |
| Of profit | 79% |
Profit margins
Is profitability improving? No, slipping
| Gross margin | 33% |
|---|---|
| Operating margin | 19% |
| Net margin, FY24 → FY25 → now | 15.2% → 15.5% → 14.1% |
Debt vs. cash
Is the balance sheet healthy? Yes, the debt is manageable
| Cash | $34.2M |
|---|---|
| Long-term debt | $1.1B |
| Net debt | $1.1B |
| Years to repay | 1.5 yrs |
Valuation
Is the stock price reasonable? Yes, it looks cheap
| P/E | 15.3× |
|---|---|
| Fair P/E for its growth | 24× |
| P/FCF | 18.4× |
| Forward P/E | 14.9× |
| EV / EBITDA | 11.3× |
At 15.3× earnings it trades below the 24× that 10% a year of growth plus a 1.1% dividend would justify. At 18.4× free cash flow it trades below that same mark.
The financials, five years deep
Pulled from Lennox International's XBRL filings on SEC EDGAR. Italic rows are worked out from the others.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Revenue growth | |||||
| Revenue | $5.2B | $5.3B | $5.0B | $4.7B | $4.2B |
| Change on the year | −3% | +7% | +6% | +13% | — |
| Free cash flow | |||||
| Free cash flow | $639M | $782M | $486M | $201M | $409M |
| Of revenue | 12% | 15% | 10% | 4% | 10% |
| Profit margins | |||||
| Gross margin | 33.4% | 33.3% | 31.1% | 27.2% | 28.3% |
| Operating margin | 20.0% | 19.5% | 15.9% | 13.9% | 14.1% |
| Net margin | 15.5% | 15.2% | 11.9% | 10.5% | 11.1% |
| Debt vs. cash | |||||
| Cash | $34.2M | $415M | $60.7M | $52.6M | $31.0M |
| Long-term debt | $1.1B | $833M | $1.1B | $814M | $1.2B |
| Net cash (debt) | −$1.1B | −$418M | −$1.1B | −$762M | −$1.2B |
What Lennox International says it does
References in this Annual Report on Form 10-K to “we,” “our,” “us,” “Lennox,” “LII” or the “Company” refer to Lennox International Inc. and its subsidiaries, unless the context requires otherwise. The Company We are a global leader in energy-efficient climate-control solutions. We design, manufacture and market a broad range of products for the heating, ventilation, air conditioning and refrigeration (“HVACR”) markets. We have leveraged our expertise to become an industry leader known for innovation, quality and reliability. Our products and services are sold through multiple distribution channels under various brand names. The Company was founded in 1895, in Marshalltown, Iowa, by Dave Lennox, the owner of a machine repair business for railroads. He designed and patented a riveted steel coal-fired furnace, which led to numerous advancements in heating, cooling and climate control solutions. Our two business segments, Home Comfort…
Risk factors LII lists in its 10-K
- We May Not be Able to Compete Favorably in the Competitive HVACR Business
- If We Cannot Successfully Develop and Market New Products or Execute Our Business Strategy, Our Results of Operations Could be Adversely Impacted
- Our Ability to Meet Customer Demand and Maintain Profitability may be Limited by Our Single-Location Production Facilities, Reliance on Certain Key Suppliers, and Unanticipated Significant Shifts in Customer Demand
- Our Results of Operations May Suffer if We Cannot Continue to License or Enforce the Intellectual Property Rights on Which Our Businesses Depend or if Third Parties Assert That We Violate Their Intellectual Property Rights
- Our Operations Can Be Adversely Affected By Our Ability to Attract, Motivate, Develop, and Retain Our Employees, Labor Shortages and Work Stoppages, Turnover, Labor Cost Increases and Other Labor Relations Problems
- Artificial Intelligence Technologies Could Present Business, Compliance, and Reputational Risks
- Our Financial Performance Is Affected by the Conditions and Performance of the U.S. Construction Industry
- Cooler than Normal Summers and Warmer than Normal Winters May Depress Our Sales
- Price Volatility for Commodities and Components We Purchase or Significant Supply Interruptions Could Have an Adverse Effect on Our Cash Flow or Results of Operations
- We May Incur Substantial Costs as a Result of Product Liability, Warranty Claims, or Recalls
- Changes in Environmental and Climate-Related Legislation, Government Regulations, or Policies Could Have an Adverse Effect on Our Results of Operations
- Changes in Tax Laws and Interpretations Could Adversely Impact our Effective Tax Rates and Financial Results
- Changes in U.S. Trade Policy, Including the Imposition of Tariffs and the Resulting Consequences, Could Have an Adverse Effect on Our Results of Operations
- Our Reputation, Ability to Do Business, and Results of Operations Could be Impaired By Improper Conduct By Any of Our Employees, Agents, or Business Partners
- We are Subject to Claims, Lawsuits, and Other Litigation That Could Have an Adverse Effect on Our Results of Operations
- Global General Business, Economic and Market Conditions Could Adversely Affect Our Financial Performance and Limit Our Access to the Capital Markets
- Our International Operations Subject Us to Risks Related to Foreign Currencies Fluctuations and Other Risks
- Cyber Attacks and Other Disruptions or Misuse of Information Systems We Rely Upon Could Affect Our Ability to Conduct Our Business Effectively
- We May Not be Able to Successfully Integrate and Operate Businesses that We May Acquire nor Realize the Anticipated Benefits of Strategic Relationships We May Form