Lennox International designs, manufactures, and markets climate control products for the heating, ventilation, air conditioning, and refrigeration markets. The company operates in three segments: Residential Heating & Cooling, Commercial Heating & Cooling, and Refrigeration. The company was founded in 1895 and is based in Richardson, Texas.
LII Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Lennox International Inc. To summarize, we found that Lennox International Inc ranked in the 35th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. The most interesting components of our discounted cash flow analysis for Lennox International Inc ended up being:
The company's balance sheet shows it gets 84% of its capital from equity, and 16% of its capital from debt. Notably, its equity weight is greater than 73.4% of US equities in the Industrials sector yielding a positive free cash flow.
LII's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 37.33% of tickers in our DCF set.
Lennox International Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 11.69. This coverage rate is greater than that of 75.72% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
FLS, CODI, CP, PPIH, and INFO can be thought of as valuation peers to LII, in the sense that they are in the Industrials sector and have a similar price forecast based on DCF valuation.