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 6 out of 10 to LII. LII was compared to 42 industry peers in the Building Products industry. LII scores excellent points on both the profitability and health parts. This is a solid base for a good stock. LII is valied quite expensively at the moment, while it does show a decent growth rate. With these ratings, LII could be worth investigating further for quality investing!.
1. Profitability
1.1 Basic Checks
In the past year LII was profitable.
In the past year LII had a positive cash flow from operations.
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
Looking at the Return On Assets, with a value of 23.24%, LII belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
LII has a Return On Equity of 94.18%. This is amongst the best in the industry. LII outperforms 97.62% of its industry peers.
LII has a Return On Invested Capital of 38.40%. This is amongst the best in the industry. LII outperforms 100.00% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for LII is significantly above the industry average of 12.98%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 23.24% | ||
| ROE | 94.18% | ||
| ROIC | 38.4% |
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
The Profit Margin of LII (14.96%) is better than 80.95% of its industry peers.
In the last couple of years the Profit Margin of LII has grown nicely.
LII's Operating Margin of 19.18% is fine compared to the rest of the industry. LII outperforms 78.57% of its industry peers.
LII's Operating Margin has improved in the last couple of years.
LII's Gross Margin of 32.80% is in line compared to the rest of the industry. LII outperforms 52.38% of its industry peers.
In the last couple of years the Gross Margin of LII has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.18% | ||
| PM (TTM) | 14.96% | ||
| GM | 32.8% |
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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so 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
The debt/assets ratio for LII has been reduced compared to a year ago.
2.2 Solvency
LII has an Altman-Z score of 9.39. This indicates that LII is financially healthy and has little risk of bankruptcy at the moment.
LII's Altman-Z score of 9.39 is amongst the best of the industry. LII outperforms 92.86% of its industry peers.
The Debt to FCF ratio of LII is 1.49, which is an excellent value as it means it would take LII, only 1.49 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of LII (1.49) is better than 78.57% 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.
The Debt to Equity ratio of LII (0.98) is worse than 76.19% of its industry peers.
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 | 1.49 | ||
| Altman-Z | 9.39 |
ROIC/WACC3.95
WACC9.72%
2.3 Liquidity
A Current Ratio of 1.43 indicates that LII should not have too much problems paying its short term obligations.
The Current ratio of LII (1.43) is worse than 78.57% 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.
LII's Quick ratio of 0.74 is on the low side compared to the rest of the industry. LII is outperformed by 88.10% of its industry peers.
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 | 0.74 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 20.73% over the past year.
Measured over the past years, LII shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.03% on average per year.
LII shows a small growth in Revenue. In the last year, the Revenue has grown by 7.78%.
The Revenue has been growing slightly by 7.01% on average over the past years.
EPS 1Y (TTM)20.73%
EPS 3Y21.5%
EPS 5Y15.03%
EPS Q2Q%-2.88%
Revenue 1Y (TTM)7.78%
Revenue growth 3Y8.39%
Revenue growth 5Y7.01%
Sales Q2Q%2.44%
3.2 Future
The Earnings Per Share is expected to grow by 8.00% on average over the next years. This is quite good.
The Revenue is expected to grow by 7.13% on average over the next years.
EPS Next Y2.4%
EPS Next 2Y6.03%
EPS Next 3Y7.32%
EPS Next 5Y8%
Revenue Next Year4.39%
Revenue Next 2Y4.97%
Revenue Next 3Y5.38%
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.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 26.56 indicates a quite expensive valuation of LII.
Compared to the rest of the industry, the Price/Earnings ratio of LII indicates a slightly more expensive valuation: LII is more expensive than 64.29% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 26.60. LII is around the same levels.
With a Price/Forward Earnings ratio of 23.52, LII is valued on the expensive side.
Compared to the rest of the industry, the Price/Forward Earnings ratio of LII indicates a slightly more expensive valuation: LII is more expensive than 61.90% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.43, LII is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.56 | ||
| Fwd PE | 23.52 |
4.2 Price Multiples
LII's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. LII is more expensive than 71.43% of the companies in the same industry.
The rest of the industry has a similar Price/Free Cash Flow ratio as LII.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 27.4 | ||
| EV/EBITDA | 19.86 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
LII has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)11.09
PEG (5Y)1.77
EPS Next 2Y6.03%
EPS Next 3Y7.32%
5. Dividend
5.1 Amount
LII has a yearly dividend return of 0.77%, which is pretty low.
Compared to an average industry Dividend Yield of 1.16, LII pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.36, LII's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.77% |
5.2 History
The dividend of LII is nicely growing with an annual growth rate of 9.85%!
LII has been paying a dividend for at least 10 years, so it has 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
20.19% 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.
DP20.19%
EPS Next 2Y6.03%
EPS Next 3Y7.32%
597.05
-7.42 (-1.23%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryBuilding Products
Earnings (Last)
Earnings (Next)
Inst Owners77.02%
Inst Owner Change4.66%
Ins Owners9.58%
Ins Owner Change2.89%
Market Cap21.18B
Analysts64.8
Price Target571.33 (-4.31%)
Short Float %4.96%
Short Ratio3.38
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.77% |
Yearly Dividend4.5
Dividend Growth(5Y)9.85%
DP20.19%
Div Incr Years14
Div Non Decr Years24
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)16.5%
Min EPS beat(2)2%
Max EPS beat(2)31%
EPS beat(4)4
Avg EPS beat(4)11.54%
Min EPS beat(4)2%
Max EPS beat(4)31%
EPS beat(8)8
Avg EPS beat(8)10.92%
EPS beat(12)11
Avg EPS beat(12)9%
EPS beat(16)14
Avg EPS beat(16)8.39%
Revenue beat(2)2
Avg Revenue beat(2)5.72%
Min Revenue beat(2)3.93%
Max Revenue beat(2)7.51%
Revenue beat(4)3
Avg Revenue beat(4)3.38%
Min Revenue beat(4)-2.68%
Max Revenue beat(4)7.51%
Revenue beat(8)6
Avg Revenue beat(8)2.54%
Revenue beat(12)9
Avg Revenue beat(12)1.67%
Revenue beat(16)11
Avg Revenue beat(16)1.28%
PT rev (1m)-10.51%
PT rev (3m)-10.86%
EPS NQ rev (1m)-3.78%
EPS NQ rev (3m)-4.01%
EPS NY rev (1m)-0.6%
EPS NY rev (3m)-0.6%
Revenue NQ rev (1m)-1.65%
Revenue NQ rev (3m)-1.78%
Revenue NY rev (1m)0.25%
Revenue NY rev (3m)-0.09%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.56 | ||
| Fwd PE | 23.52 | ||
| P/S | 3.95 | ||
| P/FCF | 27.4 | ||
| P/OCF | 22.71 | ||
| P/B | 24.85 | ||
| P/tB | 33.49 | ||
| EV/EBITDA | 19.86 |
EPS(TTM)22.48
EY3.77%
EPS(NY)25.39
Fwd EY4.25%
FCF(TTM)21.79
FCFY3.65%
OCF(TTM)26.29
OCFY4.4%
SpS151.26
BVpS24.03
TBVpS17.83
PEG (NY)11.09
PEG (5Y)1.77
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 23.24% | ||
| ROE | 94.18% | ||
| ROCE | 47.64% | ||
| ROIC | 38.4% | ||
| ROICexc | 42.82% | ||
| ROICexgc | 48.3% | ||
| OM | 19.18% | ||
| PM (TTM) | 14.96% | ||
| GM | 32.8% | ||
| FCFM | 14.41% |
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 Turnover1.55
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.98 | ||
| Debt/FCF | 1.49 | ||
| Debt/EBITDA | 0.74 | ||
| Cap/Depr | 165.05% | ||
| Cap/Sales | 2.97% | ||
| Interest Coverage | 24.16 | ||
| Cash Conversion | 82.83% | ||
| Profit Quality | 96.29% | ||
| Current Ratio | 1.43 | ||
| Quick Ratio | 0.74 | ||
| Altman-Z | 9.39 |
F-Score8
WACC9.72%
ROIC/WACC3.95
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)20.73%
EPS 3Y21.5%
EPS 5Y15.03%
EPS Q2Q%-2.88%
EPS Next Y2.4%
EPS Next 2Y6.03%
EPS Next 3Y7.32%
EPS Next 5Y8%
Revenue 1Y (TTM)7.78%
Revenue growth 3Y8.39%
Revenue growth 5Y7.01%
Sales Q2Q%2.44%
Revenue Next Year4.39%
Revenue Next 2Y4.97%
Revenue Next 3Y5.38%
Revenue Next 5Y7.13%
EBIT growth 1Y23.21%
EBIT growth 3Y21.13%
EBIT growth 5Y16.35%
EBIT Next Year17.25%
EBIT Next 3Y11.86%
EBIT Next 5Y8.68%
FCF growth 1Y266.92%
FCF growth 3Y24.15%
FCF growth 5Y21.91%
OCF growth 1Y190.2%
OCF growth 3Y22.42%
OCF growth 5Y19.01%