LENNOX INTERNATIONAL INC (LII) Stock Fundamental Analysis
NYSE:LII - New York Stock Exchange, Inc. - US5261071071 - Common Stock - Currency: USD
We assign a fundamental rating of 7 out of 10 to LII. LII was compared to 41 industry peers in the Building Products industry. Both the health and profitability get an excellent rating, making LII a very profitable company, without any liquidiy or solvency issues. While showing a medium growth rate, LII is valued expensive at the moment. These ratings could make LII a good candidate for quality investing.
1. Profitability
1.1 Basic Checks
In the past year LII was profitable.
LII had a positive operating cash flow in the past year.
In the past 5 years LII has always been profitable.
Each year in the past 5 years LII had a positive operating cash flow.
1.2 Ratios
LII has a Return On Assets of 23.24%. This is amongst the best in the industry. LII outperforms 100.00% of its industry peers.
With an excellent Return On Equity value of 94.91%, LII belongs to the best of the industry, outperforming 97.56% of the companies in the same industry.
With an excellent Return On Invested Capital value of 38.88%, LII belongs to the best of the industry, outperforming 100.00% of the companies in the same industry.
LII had an Average Return On Invested Capital over the past 3 years of 42.17%. This is significantly above the industry average of 12.93%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 23.24% | ||
| ROE | 94.91% | ||
| ROIC | 38.88% |
ROA(3y)21.23%
ROA(5y)20.52%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)42.17%
ROIC(5y)38.23%
1.3 Margins
With an excellent Profit Margin value of 15.11%, LII belongs to the best of the industry, outperforming 80.49% of the companies in the same industry.
In the last couple of years the Profit Margin of LII has grown nicely.
LII's Operating Margin of 19.49% is amongst the best of the industry. LII outperforms 80.49% of its industry peers.
LII's Operating Margin has improved in the last couple of years.
LII has a Gross Margin (33.17%) which is in line with its industry peers.
LII's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.49% | ||
| PM (TTM) | 15.11% | ||
| GM | 33.17% |
OM growth 3Y11.75%
OM growth 5Y8.73%
PM growth 3Y10.94%
PM growth 5Y7.07%
GM growth 3Y5.4%
GM growth 5Y3.18%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), LII is creating value.
The number of shares outstanding for LII remains at a similar level compared to 1 year ago.
Compared to 5 years ago, LII has less shares outstanding
LII has a better debt/assets ratio than last year.
2.2 Solvency
LII has an Altman-Z score of 8.92. This indicates that LII is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of LII (8.92) is better than 92.68% of its industry peers.
The Debt to FCF ratio of LII is 1.47, which is an excellent value as it means it would take LII, only 1.47 years of fcf income to pay off all of its debts.
LII has a better Debt to FCF ratio (1.47) than 80.49% of its industry peers.
LII has a Debt/Equity ratio of 0.98. This is a neutral value indicating LII is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.98, LII is not doing good in the industry: 78.05% of the companies in the same industry are doing better.
Although LII does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.98 | ||
| Debt/FCF | 1.47 | ||
| Altman-Z | 8.92 |
ROIC/WACC3.82
WACC10.19%
2.3 Liquidity
LII has a Current Ratio of 1.43. This is a normal value and indicates that LII is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of LII (1.43) is worse than 75.61% of its industry peers.
LII has a Quick Ratio of 1.43. This is a bad value and indicates that LII is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.90, LII is not doing good in the industry: 78.05% of the companies in the same industry are doing better.
The current and quick ratio evaluation for LII is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.43 | ||
| Quick Ratio | 0.9 |
3. Growth
3.1 Past
LII shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 25.58%, which is quite impressive.
The Earnings Per Share has been growing by 15.03% on average over the past years. This is quite good.
LII shows a small growth in Revenue. In the last year, the Revenue has grown by 7.21%.
LII shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.01% yearly.
EPS 1Y (TTM)25.58%
EPS 3Y21.5%
EPS 5Y15.03%
EPS Q2Q%54.27%
Revenue 1Y (TTM)7.21%
Revenue growth 3Y8.39%
Revenue growth 5Y7.01%
Sales Q2Q%16.47%
3.2 Future
LII is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 8.00% yearly.
Based on estimates for the next years, LII will show a small growth in Revenue. The Revenue will grow by 7.13% on average per year.
EPS Next Y3.02%
EPS Next 2Y6.85%
EPS Next 3Y8.2%
EPS Next 5Y8%
Revenue Next Year4.12%
Revenue Next 2Y5.25%
Revenue Next 3Y5.84%
Revenue Next 5Y7.13%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 23.96, which indicates a rather expensive current valuation of LII.
LII's Price/Earnings ratio is a bit more expensive when compared to the industry. LII is more expensive than 65.85% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.29, LII is valued at the same level.
LII is valuated rather expensively with a Price/Forward Earnings ratio of 23.26.
Based on the Price/Forward Earnings ratio, LII is valued a bit more expensive than the industry average as 65.85% of the companies are valued more cheaply.
LII is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.32, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.96 | ||
| Fwd PE | 23.26 |
4.2 Price Multiples
68.29% of the companies in the same industry are cheaper than LII, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of LII is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.55 | ||
| EV/EBITDA | 18 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates LII does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of LII may justify a higher PE ratio.
PEG (NY)7.94
PEG (5Y)1.59
EPS Next 2Y6.85%
EPS Next 3Y8.2%
5. Dividend
5.1 Amount
With a yearly dividend of 0.83%, LII is not a good candidate for dividend investing.
LII's Dividend Yield is comparable with the industry average which is at 1.28.
Compared to an average S&P500 Dividend Yield of 2.51, LII's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.83% |
5.2 History
The dividend of LII is nicely growing with an annual growth rate of 9.85%!
LII has paid a dividend for at least 10 years, which is a reliable track record.
LII has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)9.85%
Div Incr Years14
Div Non Decr Years24
5.3 Sustainability
19.87% of the earnings are spent on dividend by LII. This is a low number and sustainable payout ratio.
The dividend of LII is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP19.87%
EPS Next 2Y6.85%
EPS Next 3Y8.2%
541.02
-15.13 (-2.72%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryBuilding Products
Earnings (Last)
Earnings (Next)
Inst Owners77.02%
Inst Owner Change1.53%
Ins Owners9.58%
Ins Owner Change1.76%
Market Cap19.20B
Analysts55
Price Target638.46 (18.01%)
Short Float %5.4%
Short Ratio4.25
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.83% |
Yearly Dividend4.5
Dividend Growth(5Y)9.85%
DP19.87%
Div Incr Years14
Div Non Decr Years24
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)20.63%
Min EPS beat(2)10.27%
Max EPS beat(2)31%
EPS beat(4)4
Avg EPS beat(4)13.23%
Min EPS beat(4)2.91%
Max EPS beat(4)31%
EPS beat(8)8
Avg EPS beat(8)12.62%
EPS beat(12)11
Avg EPS beat(12)9.9%
EPS beat(16)14
Avg EPS beat(16)12.7%
Revenue beat(2)2
Avg Revenue beat(2)6.14%
Min Revenue beat(2)4.76%
Max Revenue beat(2)7.51%
Revenue beat(4)2
Avg Revenue beat(4)2.07%
Min Revenue beat(4)-2.68%
Max Revenue beat(4)7.51%
Revenue beat(8)6
Avg Revenue beat(8)2.16%
Revenue beat(12)9
Avg Revenue beat(12)1.66%
Revenue beat(16)11
Avg Revenue beat(16)2.07%
PT rev (1m)-0.55%
PT rev (3m)-0.62%
EPS NQ rev (1m)2.73%
EPS NQ rev (3m)-14.53%
EPS NY rev (1m)0%
EPS NY rev (3m)-1.46%
Revenue NQ rev (1m)1.38%
Revenue NQ rev (3m)-8.1%
Revenue NY rev (1m)-0.07%
Revenue NY rev (3m)-2.41%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.96 | ||
| Fwd PE | 23.26 | ||
| P/S | 3.59 | ||
| P/FCF | 24.55 | ||
| P/OCF | 20.3 | ||
| P/B | 22.58 | ||
| P/tB | 30.47 | ||
| EV/EBITDA | 18 |
EPS(TTM)22.58
EY4.17%
EPS(NY)23.26
Fwd EY4.3%
FCF(TTM)22.04
FCFY4.07%
OCF(TTM)26.65
OCFY4.93%
SpS150.5
BVpS23.96
TBVpS17.76
PEG (NY)7.94
PEG (5Y)1.59
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 23.24% | ||
| ROE | 94.91% | ||
| ROCE | 48.24% | ||
| ROIC | 38.88% | ||
| ROICexc | 48.34% | ||
| ROICexgc | 55.35% | ||
| OM | 19.49% | ||
| PM (TTM) | 15.11% | ||
| GM | 33.17% | ||
| FCFM | 14.64% |
ROA(3y)21.23%
ROA(5y)20.52%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)42.17%
ROIC(5y)38.23%
ROICexc(3y)46.95%
ROICexc(5y)41.92%
ROICexgc(3y)55.8%
ROICexgc(5y)49.64%
ROCE(3y)53.49%
ROCE(5y)48.13%
ROICexcg growth 3Y9.55%
ROICexcg growth 5Y2.53%
ROICexc growth 3Y10.23%
ROICexc growth 5Y4.03%
OM growth 3Y11.75%
OM growth 5Y8.73%
PM growth 3Y10.94%
PM growth 5Y7.07%
GM growth 3Y5.4%
GM growth 5Y3.18%
F-Score8
Asset Turnover1.54
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.98 | ||
| Debt/FCF | 1.47 | ||
| Debt/EBITDA | 0.73 | ||
| Cap/Depr | 172.03% | ||
| Cap/Sales | 3.06% | ||
| Interest Coverage | 23.04 | ||
| Cash Conversion | 83.23% | ||
| Profit Quality | 96.93% | ||
| Current Ratio | 1.43 | ||
| Quick Ratio | 0.9 | ||
| Altman-Z | 8.92 |
F-Score8
WACC10.19%
ROIC/WACC3.82
Cap/Depr(3y)197.58%
Cap/Depr(5y)169.68%
Cap/Sales(3y)3.41%
Cap/Sales(5y)2.99%
Profit Quality(3y)73.25%
Profit Quality(5y)91.54%
High Growth Momentum
Growth
EPS 1Y (TTM)25.58%
EPS 3Y21.5%
EPS 5Y15.03%
EPS Q2Q%54.27%
EPS Next Y3.02%
EPS Next 2Y6.85%
EPS Next 3Y8.2%
EPS Next 5Y8%
Revenue 1Y (TTM)7.21%
Revenue growth 3Y8.39%
Revenue growth 5Y7.01%
Sales Q2Q%16.47%
Revenue Next Year4.12%
Revenue Next 2Y5.25%
Revenue Next 3Y5.84%
Revenue Next 5Y7.13%
EBIT growth 1Y29.12%
EBIT growth 3Y21.13%
EBIT growth 5Y16.35%
EBIT Next Year17.25%
EBIT Next 3Y11.86%
EBIT Next 5Y8.68%
FCF growth 1Y60.93%
FCF growth 3Y24.15%
FCF growth 5Y21.91%
OCF growth 1Y28.46%
OCF growth 3Y22.42%
OCF growth 5Y19.01%