It’s been a good week for Lennox International Inc. (NYSE:LII) shareholders, because the company has just released its latest annual results, and the shares gained 2.4% to US$239. Lennox International reported in line with analyst predictions, delivering revenues of US$3.8b and statutory earnings per share of US$10.38, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what analysts’ statutory forecasts suggest is in store for next year.
Following the latest results, Lennox International’s 16 analysts are now forecasting revenues of US$3.98b in 2020. This would be an okay 4.6% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to step up 10% to US$11.57. In the lead-up to this report, analysts had been modelling revenues of US$3.99b and earnings per share (EPS) of US$11.61 in 2020. So it’s pretty clear that, although analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$238. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Lennox International at US$287 per share, while the most bearish prices it at US$185. This shows there is still quite a bit of diversity in estimates, but analysts don’t appear to be totally split on the stock as though it might be a success or failure situation.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Lennox International’s past performance and to peers in the same market. It’s clear from the latest estimates that Lennox International’s rate of growth is expected to accelerate meaningfully, with forecast 4.6% revenue growth noticeably faster than its historical growth of 3.1%p.a. over the past five years. Compare this with other companies in the same market, which are forecast to grow their revenue 4.3% next year. Lennox International is expected to grow at about the same rate as its market, so it’s not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The most obvious conclusion from these results is that there’s been no major change in the business’ prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. We have estimates – from multiple Lennox International analysts – going out to 2022, and you can see them free on our platform here.
You can also see whether Lennox International is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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