Market Watch: Lennox International Sees Mixed Performance Following Strong Earnings
With a market capitalization of $20.8 billion, Lennox International Inc. (LII) stands out as a frontrunner in climate control solutions. Based in Richardson, Texas, the company creates a wide array of heating, ventilation, air conditioning, and refrigeration (HVACR) products for both residential and commercial consumers.
Stock Performance Stands Out
Lennox shares have performed better than the overall market in the past year, with a remarkable gain of 31.8% compared to the broader S&P 500 Index’s increase of 20.7%. However, in the current year, LII’s shares have dipped by 1.1%, contrasting with the S&P 500’s upswing of 3.2%.
Compared to the Industrial Select Sector SPDR Fund (XLI), which saw a return of 18.5% in the same period, LII has outperformed significantly.
Strong Earnings Report with Investor Concerns
On January 29, Lennox released its fiscal Q4 2024 earnings, which exceeded analysts’ expectations for both earnings and revenue. The company reported an earnings per share (EPS) of $5.60, surpassing the estimated $4.15, and revenue of $1.3 billion, which was above the $1.23 billion forecast. Despite these strong results, shares fell by over 8% due to cautious investor reactions to the company’s free cash flow guidance of $650 million to $800 million, which was lower than the consensus estimate of $771.8 million.
For the current fiscal year ending in December, analysts anticipate a 1.6% growth in LII’s EPS to reach $22.94. Lennox has consistently outperformed earnings expectations recently, beating forecasts in all four previous quarters.
Analyst Ratings Reflect Caution
Currently, the consensus rating from the 17 analysts covering Lennox is a “Hold.” This includes four “Strong Buy” ratings, eight “Holds,” one “Moderate Sell,” and four “Strong Sell” ratings.
This is a shift from a month ago when six analysts had rated the stock as a “Strong Buy.”
Price Target Adjustments by Analysts
On February 3, analyst Joseph O’Dea of Wells Fargo & Company downgraded Lennox from “Equal-Weight” to “Underweight” and adjusted the price target from $630 to $580.
The average price target for LII is now $634.78, indicating a potential 5.4% increase from current levels. Notably, the highest target of $750 suggests a possible upside of 24.5%.
On the date of publication, Kritika Sarmah did not hold any positions in the securities mentioned in this article. All information and data in this article are for informational purposes only. For more details, please consult the Barchart Disclosure Policy.
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