Lennox International (LII): Assessing Valuation Opportunity After Recent Share Price Pullback

Lennox International (LII) shares have pulled back over the past month, reflecting a broader sector trend in capital goods. With the stock down 4% in that period and off 13% year-to-date, investors are now weighing potential value opportunities and the company’s recent fundamentals.

See our latest analysis for Lennox International.

After a sharp drop in recent months, Lennox International's share price has lost some momentum this year, echoing caution seen across the sector. While the year-to-date share price return stands at -13.49%, the broader perspective is more resilient. Over the past three years, a total shareholder return of 140.63% demonstrates robust long-term performance, even amid current volatility.

If these ups and downs have you curious about broader opportunities, this could be the right time to discover fast growing stocks with high insider ownership

With Lennox trading below analyst targets but coming off a long period of strong returns, the big question is whether today's lower share price signals a buying opportunity or if the market is already factoring in future growth.

Most Popular Narrative: 16.5% Undervalued

Lennox International’s narrative-driven fair value lands at $626.50, comfortably above the last close of $522.95. This sharp gap is built on strong assumptions about growth and profitability. The narrative’s outlook is especially intriguing for investors watching the sector’s resilience.

Strategic partnerships with Samsung (mini splits/VRF with smart tech integration) and Ariston (heat pump water heaters) are expected to expand Lennox's advanced, energy-efficient product offerings. These initiatives enhance its access to segments benefiting from regulatory and consumer demand for sustainability, with significant revenue growth anticipated from 2026 and 2027 onward.

Read the complete narrative.

Want to know the secret behind that bold price target? The most pivotal factor is a transformation in earnings and profit margins you might not expect. There is one financial lever in the narrative that could change everything if it plays out. Curious which metric is the linchpin for Lennox’s future value? Get the details inside.

Result: Fair Value of $626.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing refrigerant supply challenges or persistent softness in new construction could undermine Lennox’s growth outlook and put pressure on longer-term earnings potential.

Find out about the key risks to this Lennox International narrative.

Another View: Market's Multiple Tells a Different Story

Looking at Lennox International through a market earnings lens, the stock currently trades at a 22x earnings multiple, which is higher than both its peer average of 18.6x and the broader US Building industry’s 20.4x. However, the fair ratio is estimated at 25.3x, suggesting room for upside if sentiment shifts. Does this premium point to genuine long-term strength, or could it signal downside risk if expectations change?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Lennox International Narrative

If you want a different angle or think you could spot fresh opportunities in the numbers, you can easily craft your own view in just a few minutes, and Do it your way.

A great starting point for your Lennox International research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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