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Lennox International, Inc. (LII) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Lennox International (LII - Free Report) ? Shares have been on the move with the stock up 11.9% over the past month. The stock hit a new 52-week high of $451.35 in the previous session. Lennox International has gained 87.7% since the start of the year compared to the 52.6% move for the Zacks Construction sector and the 79.2% return for the Zacks Building Products - Air Conditioner and Heating industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 26, 2023, Lennox reported EPS of $5.37 versus consensus estimate of $4.73.
For the current fiscal year, Lennox is expected to post earnings of $17.77 per share on $4.9 billion in revenues. This represents a 26.3% change in EPS on a 3.78% change in revenues. For the next fiscal year, the company is expected to earn $19.66 per share on $5.2 billion in revenues. This represents a year-over-year change of 10.62% and 6.28%, respectively.
Valuation Metrics
Lennox may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Lennox has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 25.3X current fiscal year EPS estimates, which is not in-line with the peer industry average of 30.3X. On a trailing cash flow basis, the stock currently trades at 27.4X versus its peer group's average of 27.4X. Additionally, the stock has a PEG ratio of 3.61. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Lennox currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Lennox fits the bill. Thus, it seems as though Lennox shares could have a bit more room to run in the near term.
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Lennox International, Inc. (LII) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Lennox International (LII - Free Report) ? Shares have been on the move with the stock up 11.9% over the past month. The stock hit a new 52-week high of $451.35 in the previous session. Lennox International has gained 87.7% since the start of the year compared to the 52.6% move for the Zacks Construction sector and the 79.2% return for the Zacks Building Products - Air Conditioner and Heating industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 26, 2023, Lennox reported EPS of $5.37 versus consensus estimate of $4.73.
For the current fiscal year, Lennox is expected to post earnings of $17.77 per share on $4.9 billion in revenues. This represents a 26.3% change in EPS on a 3.78% change in revenues. For the next fiscal year, the company is expected to earn $19.66 per share on $5.2 billion in revenues. This represents a year-over-year change of 10.62% and 6.28%, respectively.
Valuation Metrics
Lennox may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Lennox has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 25.3X current fiscal year EPS estimates, which is not in-line with the peer industry average of 30.3X. On a trailing cash flow basis, the stock currently trades at 27.4X versus its peer group's average of 27.4X. Additionally, the stock has a PEG ratio of 3.61. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Lennox currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Lennox fits the bill. Thus, it seems as though Lennox shares could have a bit more room to run in the near term.