LII changes
Pick any two versions below to diff them.
- Price
- $358.50 → $344.08(−4.0%)
- Next earnings
- Oct 28, 2026 → Jan 28, 2027
- Next earnings is estimate
- No → Yes
- Thesis
- The market prices Lennox for a long removed: fall added: period of weak profit in home removed: HVAC sales. added: HVAC. Home Comfort Solutions revenue fell removed: 21% in Q4 2025, removed: 10% in Q1 2026 and removed: 7% in Q2 2026, because new home construction removed: is added: was weak and distributors bought less. removed: Lower volumes cut added: In Q3 2026, home revenue grew 3%, but the segment margin removed: by 130 added: fell 490 basis points added: to 18.7%. Lennox cut prices in removed: Q2 2026, added: some market segments to defend and removed: Lennox lowered added: recapture market share, and inflation and tariffs raised costs. It cut its 2026 added: adjusted EPS guidance added: twice, to removed: $23.00 added: $21.00 to removed: $24.00 from $23.50 to $25.00. added: $21.50 in October 2026. Investors fear that added: competition and costs keep home removed: demand stays low while inflation added: margins low, and removed: tariffs raise costs, and that the commercial growth cannot offset it. For the gap to close, removed: home sales added: three things must removed: stop falling and return to growth added: be true. Home Comfort Solutions must recover its margin through removed: 2027. added: better price pass-through, productivity and new entry-tier products, while it keeps or regains market share. Building Climate Solutions must keep its organic growth, which was 15% in removed: Q2 added: Q3 2026, and its margin near removed: 25%. added: 26%. Lennox must removed: also meet its added: new 2026 guidance of removed: about 8% revenue growth added: $21.00 to $21.50 of adjusted EPS and removed: $750 added: $700 million to removed: $850 added: $750 million of free cash removed: flow while it integrates Heat Controller. added: flow. The removed: Q3 2026 report on October 28, 2026, shows the summer season, and the Q4 report with the 2027 guidance in about late January 2027 added: is the next test, and the 2027 summer season shows whether home removed: demand recovers. added: margins recover. If home removed: sales stabilize, added: margins recover, the gap can close over the next four to six quarters. If removed: housing stays weak added: price competition continues through 2027, it can stay open longer.
- Risks
- Home HVAC sales fell for several removed: quarters. added: quarters before a 3% rise in Q3 2026. Competitors put pressure on prices, and Lennox cut some prices to defend market share. If removed: new home construction added: price competition and removed: replacement added: weak demand removed: stay weak, added: continue, Home Comfort Solutions, the larger segment, loses removed: volume and margin. Steel, aluminum and copper prices and tariffs change product costs. Lennox raised prices to offset them, and tariff refunds of $30 million helped profit in Q2 2026, which may not repeat. added: In Q3 2026, product cost inflation, including tariffs, and lower factory absorption cut segment profit by $45 million. Lennox grows by buying companies such as Duro Dyne, Supco and Heat Controller. If it does not integrate them well, the expected sales and profits may not come. HVAC sales depend on the weather. A cool summer lowers replacement demand for air conditioners.
- Balance sheet
- Cash: removed: $52M added: $46M Debt: removed: $1.5B added: $1.6B Net debt: removed: $1.5B added: $1.6B Interest cover: removed: 17× added: 18× Undrawn credit line: removed: $586M, added: $545M, to May 2030 Debt due within 12 months: removed: $412M added: $774M Last debt due: 2028 Ratings: Moody's Baa1 (stable outlook), S&P BBB (stable outlook) Debt is the removed: principal added: amount on the balance sheet at removed: June added: September 30, 2026: removed: $412.0 added: $455.1 million of commercial paper, removed: a $300 added: $319.2 million removed: term loan due October 16, 2027, added: of current maturities of long-term debt and $847.1 million of long-term debt. These amounts include finance leases. The 10-Q for the quarter is not filed yet, so this text assumes that the other debt did not change from June 30, 2026: $300 million of 1.70% notes due August 1, removed: 2027 added: 2027, a $300 million term loan due October 16, 2027, and $500 million of 5.50% notes due September 2028. removed: It does not include $74.7 million of finance leases. Due within 12 months is the commercial removed: paper. added: paper and the current maturities, mostly the 2027 notes. Debt is usually higher in the first half of the year because of seasonal working capital. Undrawn credit is the removed: $586.3 million available under the $1.0 billion revolving credit facility removed: after added: less the commercial paper, added: about $545 million, and the facility matures in May 2030. Interest cover is operating income divided by net interest expense for the first removed: half added: nine months of 2026. removed: The debt-to-total-capital ratio added: Free cash flow was removed: 55%. After the quarter, added: $461 million in removed: July added: the first nine months of 2026, added: and Lennox removed: paid about $205 added: expects $700 million added: to $750 million for removed: Heat Controller. It added: 2026. In the first nine months, it bought back removed: $151.3 added: $301.9 million of shares removed: in the first half of 2026 and removed: expects $750 added: paid $209.9 million removed: to $850 million of free cash flow in 2026. added: for acquisitions, mostly Heat Controller. As of removed: Jun added: Sep 30, 2026.
- Checkpoints
- Oct 28, 2026: Q3 2026 results: home HVAC volumes. removed: Pending. added: Failed. Watch: A smaller fall or growth in Home Comfort Solutions revenue and a kept 2026 EPS range pass; another guidance cut fails. added: Outcome: Home Comfort Solutions revenue rose 3%, but Lennox cut its 2026 adjusted EPS guidance to $21.00 to $21.50 from $23.00 to $24.00. Jan added: 28, 2027 (estimate): Q4 2026 results and 2027 guidance. Pending. Watch: 2026 added: adjusted EPS of $21.00 to $21.50, free cash flow of removed: $750 added: $700 million to removed: $850 added: $750 million and 2027 guidance for added: higher home removed: sales growth added: margins pass; guidance for another year of lower added: EPS fails. Jul 2027 (estimate): Q2 2027 results: home removed: sales added: margin in the summer season. Pending. Watch: A higher Home Comfort Solutions segment margin than a year earlier passes; a further fall from price competition fails.
- Recent events
- Oct added: 28, 2026: Lennox reported Q3 2026 results. Revenue rose 10% to $1.6 billion, and adjusted diluted EPS fell 7% to $6.84. GAAP diluted EPS was $6.41. Home Comfort Solutions revenue rose 3%, but its segment margin fell 490 basis points to 18.7%, because of price cuts to defend market share, inflation and tariffs. Building Climate Solutions revenue rose 24%, with 15% organic growth. Lennox cut its 2026 adjusted EPS guidance to $21.00 to $21.50 from $23.00 to $24.00, its revenue growth guidance to about 6% and its free cash flow guidance to $700 million to $750 million. It bought back $151 million of shares in the quarter. Oct 8, 2026: Lennox said that it will report Q3 2026 results before the market opens on October 28, 2026. Jul 29, 2026: Lennox reported Q2 2026 results. Revenue rose 3% to $1.5 billion, and diluted EPS was flat at $7.72. Home Comfort Solutions revenue fell 7%, and Building Climate Solutions revenue rose 24%, with 15% organic growth. Lennox lowered its 2026 EPS guidance to $23.00 to $24.00 and kept its guidance for about 8% revenue growth and $750 million to $850 million of free cash flow. Jul 13, 2026: Lennox completed the purchase of Heat Controller, which sells the Comfort-Aire and Century brands to small and mid-size HVAC distributors in North America, for about $205 million. Lennox had signed the agreement on June 18, 2026. May 21, 2026: Lennox increased its quarterly dividend from $1.30 to $1.36 per share. Apr 29, 2026: Lennox reported Q1 2026 results. Revenue rose 6% to $1.1 billion, and diluted EPS fell 8% to $3.35. Home Comfort Solutions revenue fell 10%, a smaller fall than the 21% of Q4 2025, and Building Climate Solutions had 26% organic growth.