Should You Investigate Lennox International Inc. (NYSE:LII) At US$262?

Published
August 14, 2022
NYSE:LII
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While Lennox International Inc. (NYSE:LII) might not be the most widely known stock at the moment, it saw a significant share price rise of over 20% in the past couple of months on the NYSE. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s take a look at Lennox International’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Lennox International

What Is Lennox International Worth?

Great news for investors – Lennox International is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $383.80, but it is currently trading at US$262 on the share market, meaning that there is still an opportunity to buy now. Another thing to keep in mind is that Lennox International’s share price may be quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.

What does the future of Lennox International look like?

earnings-and-revenue-growth
NYSE:LII Earnings and Revenue Growth August 14th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Lennox International's earnings over the next few years are expected to increase by 22%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since LII is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on LII for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy LII. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 2 warning signs for Lennox International (of which 1 can't be ignored!) you should know about.

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