LII
Lennox International Inc.$544.73
Unclear
Target $523.41
Report: Mar 07, 2026Industrials • Construction • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$544.73-3.9%
Rec: UnclearConviction: High
Entry Target
$402.62
(26% below current)
Fair Value
$523.41
(4% below current)
Stop Loss
$378.65
(30% below current)
Position Size
Half
Time Horizon
Long-Term
Key Metrics
Live Snapshot
Market Data
52 Week High$689.44
52 Week Low$434.06
Avg. 3 Month Volume480K
Efficiency
LTM Gross Margin33.4%
LTM EBITDA Margin22.1%
LTM EBIT Margin20.0%
LTM Operating Margin19.9%
LTM ROA21.9%
LTM ROE80.9%
LTM ROIC29.5%
LTM ROCE43.8%
Capital Structure
Market Cap (MM)$16.2B
Enterprise Value (MM)$17.9B
Shares Outstanding34.90M
Total Debt (MM)$1.77B
Cash & Equivalents (MM)$52.70M
LTM Net Debt (MM)$1.72B
LTM Net Debt/EBITDA1.5x
Growth
TTM Rev. Growth-2.7%
Last 3-Yr Rev. CAGR3.3%
Last 3-Yr EBITDA CAGR16.2%
Last 3-Yr EPS CAGR18.0%
Valuation
Street Target Price$555.00
LTM EV/Revenue3.4x
LTM EV/Gross Profit10.3x
LTM EV/EBIT17.2x
LTM EV/EBITDA15.5x
LTM P/E20.0x
LTM EV/FCF27.9x
LTM P/FCF25.2x
LTM P/TB4.9x
LTM P/B13.9x
Dividend Yield1.1%
Payout Ratio22.0%
Executive SummarySituation: Current price is $544.73 versus fair value $523.41 (-3.9% expected return), and valuation confidence is stable. Debate: Bull case depends on Completion of Residential Destocking Management expects one-step destocking to end in Q1 2026 and two-step by Q2 2026. Bear case centers on Moat Erosion via Pricing Pressure If competitors aggressively price to clear their own excess inventory, Lennox may be forced to sacrifice its record margins to maintain market share, especially in the price-sensitive residential new con... Conclusion: Recommendation is Unclear; maintain no position until reliability and catalyst evidence improve.
Bull Case
The Ariston water-heater and Samsung heat-pump joint ventures provide clear TAM expansion; the completion of residential destocking by mid-2026 will unlock significant volume leverage on a now-leaner cost base.
Bear Case
High inventory levels ($1.15 billion) and a 23% volume decline in certain Home Comfort segments suggest that price increases may finally hit a ceiling, leading to margin compression if raw material costs rise.
Key Catalysts
Near-Term (0-6 months)Impact: High
Completion of Residential Destocking Management expects one-step destocking to end in Q1 2026 and two-step by Q2 2026. This will align facto...
Mid-Term (6-18 months)Impact: Moderate
Ariston Water Heating JV Launch The launch of residential water heating products provides a new growth vector and increases 'share of wallet...
Long-Term (18+ months)Impact: Moderate
Lennox is at a critical juncture as it transitions from a three-year stabilization phase into a high-investment expansion phase, making the...
Primary Risks
Concern: Medium
Moat Erosion via Pricing Pressure If competitors aggressively price to clear their own excess inventory, Lennox may be forced to sacrifice i...
Concern: High
Inventory and Cash Flow Strain The $1.15 billion inventory build (up 63% YoY) represents a significant tie-up of capital. If demand does not...
Concern: Medium
The stewardship verdict is positive but cautious. Management has proven they can protect the bottom line in a downturn, but the lack of insi...
Recent Activity
2025-10-22SEC Filing (8-K)
-10.19%Lennox reports Q3 2025 results with 5% revenue decline and updates full-year guidance
2025-07-23SEC Filing (8-K)
+6.59%Lennox reports Q2 2025 results with 3% revenue growth and raises full-year guidance
2025-04-23SEC Filing (8-K)
-8.98%Lennox reports Q1 2025 results with 2% revenue growth and narrows full-year EPS guidance
2025-04-09Market Movement
+9.92%Market/Sector Move +9.92%
2025-01-29SEC Filing (8-K)
-8.79%Lennox reported record Q4 and full-year 2024 results with strong growth and provided 2025 guidance.
Valuation Table
9.8/10Decision Grade
Scenario Range
$379
Bear
$633
Bull
$545