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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#570
Positioning
Market Dominance
Manufacturing
Machinery
$18.6B
Alok Maskara
Lennox International Inc. designs, manufactures, and markets a range of products for the heating, ventilation, air conditioning, and refrigeration markets. The Residential Heating & Cooling segment provides furnaces, air conditioners, heat pumps, packaged heating and cooling systems. The Refrigeration segment offers refrigeration products for preserving food and other perishables in supermarkets, convenience stores, restaurants, warehouses, and distribution centers.
Headcount
13.2K
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Dates updated upon official exchange announcement.
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = LII ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$UL UNILEVER PLC | 78 | 96 | 98 | 59 | - | - | 28.5% | 8.0% | 100.0% | 100.0% | 10.4% | -4.6% | 3.3% | 0.0x | $141.8B | VS | |
$ASML ASML HOLDING NV | 77 | 89 | 86 | 83 | - | - | 46.1% | 16.6% | 51.3% | 31.9% | 26.8% | -4.0% | 1.0% | 25.0x | $272.1B | VS | |
$ESLT ELBIT SYSTEMS LTD | 76 | 81 | 87 | 85 | - | - | 10.3% | 3.1% | 24.1% | 7.2% | 4.7% | 14.3% | 0.8% | 25.0x | $11.4B | VS | |
$MT ArcelorMittal | 75 | 71 | 98 | 85 | - | - | 2.2% | 1.5% | 9.3% | 5.3% | 2.2% | -8.5% | 2.2% | 16.0x | $18.9B | VS | |
$AMAT APPLIED MATERIALS INC /DE | 75 | 85 | 87 | 84 | 20.9x | 13.6x | 35.5% | 19.8% | 48.7% | 29.2% | 24.7% | 4.4% | 0.8% | 32.0x | $181.9B | VS | |
$SIMO Silicon Motion Technology CORP | 75 | 84 | 86 | 85 | - | - | 11.8% | 8.8% | 45.9% | 11.3% | 11.1% | 25.7% | 3.7% | 0.0x | $1.8B | VS | |
$CODA Coda Octopus Group, Inc. | 74 | 83 | 90 | 79 | 16.3x | 11.9x | 7.6% | 7.0% | 66.5% | 17.1% | 15.6% | 39.0% | 0.0% | 0.0x | $115M | VS | |
$GSK GSK plc | 74 | 84 | 90 | 70 | - | - | 22.6% | 4.9% | 71.2% | 12.8% | 9.4% | 1.7% | 5.9% | 124.0x | $72.1B | VS | |
$EFXT Enerflex Ltd. | 74 | 80 | 91 | 83 | - | - | 3.0% | 1.1% | 20.9% | 7.3% | 1.3% | 3.0% | 0.9% | 67.0x | $1.2B | VS | |
$BUD Anheuser-Busch InBev SA/NV | 74 | 84 | 97 | 63 | - | - | 8.2% | 3.5% | 55.3% | 25.9% | 12.4% | 0.7% | 1.7% | 0.0x | $87.0B | VS | |
$LII LENNOX INTERNATIONAL INC | 61 | 76 | 69 | 40 | 21.6x | 15.6x | 77.6% | 22.1% | 33.3% | 20.5% | 16.1% | -1.7% | 0.9% | 251.0x | $18.6B | ||
| SECTOR BENCH | - | - | - | - | - | 22.3x | 11.5x | -2.5% | -0.1% | 42.5% | 1.3% | -0.2% | 5.9% | 0.0% | 0.2x | - | REF |
LENNOX INTERNATIONAL INC (LII) receives a "Hold" rating with a composite score of 61.3/100. It ranks #570 out of 7,333 stocks in our coverage universe and carries a 3-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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YOY expansion rate
Core pricing power
Operating efficiency
Bottom-line conversion
Equity capital efficiency
Asset base utilization
Financial leverage load
Direct cash return
Alok Maskara
Chief Executive Officer
Labor Force
13,200
76
34
77
Audit Verdict: Average governance indicators based on financial metrics.
No recent insider transactions available for LII
HQ Base
Richardson, Texas
Lagging peers — losers tend to keep underperforming
Trading at a discount to fundamentals — favorable entry valuation
High profitability & efficiency — strong quality floor supports entry
Low volatility — smoother ride and historically better risk-adjusted returns
Aggressive spending — empire-building risk, dilutive growth
Mid-range overall rating
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Relative valuation derived from Manufacturing sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for LII.
View All RatingsMaterial decline in asset turnover efficiency detected
| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 76 | 84 | -8DRAG |
| MOMENTUM | 40 | 21 | +19ALPHA |
| VALUATION | 69 | 62 | +7ALPHA |
| INVESTMENT | 34 | 51 | -17DRAG |
| STABILITY | 77 | 78 | -1NEUTRAL |
| SHORT INT | 69 | 80 | -11DRAG |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROIC 87.9% vs WACC 9.4% (spread +78.4%)
GM 33% vs sector 43%, OM 21% vs sector 1%
Capital turnover 5.42x, R&D intensity 2.0%
Rev growth -2%, 10yr history
Interest coverage 25.5x, Net debt/EBITDA 0.8x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
Our model assigns LENNOX INTERNATIONAL INC a Hold rating, with a composite score of 61.3/100 and 3 out of 5 stars. Ranked #570 of 7,333 stocks, LII presents a mixed quantitative picture — neither compelling enough to initiate new positions nor weak enough to warrant selling. Investors already holding may consider maintaining their position while monitoring for changes in the factor profile.
LII earns a quality score of 76/100, indicating above-average business quality. The company reports a return on equity of 77.6% (sector avg: -2.5%), gross margins of 33.3% (sector avg: 42.5%), net margins of 16.1% (sector avg: -0.2%). Companies in this tier generally demonstrate consistent profitability and efficient capital deployment, though they may face some competitive pressure.
LII's value score of 69/100 indicates the stock is fairly valued based on its current fundamentals. Key valuation metrics include a P/E ratio of 21.63x, an EV/EBITDA of 15.63x, a P/B ratio of 16.78x. At this level, neither a clear bargain nor overpriced, the stock's attractiveness depends more on forward growth expectations and qualitative factors.
LENNOX INTERNATIONAL INC's investment score of 34/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of -1.7% vs. a sector average of 5.9% and a return on assets of 22.1% (sector: -0.1%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
LII is currently showing below-average momentum at 40/100, which may indicate weakening institutional interest or negative sentiment shifts. Revenue growth stands at -1.7% year-over-year, while a beta of 0.95 reflects its sensitivity to broader market moves. Investors should note that declining momentum can precede further price weakness, though contrarian opportunities sometimes emerge at these levels.
LII shows good financial stability with a score of 77/100. Key stability metrics include a beta of 0.95 and a debt-to-equity ratio of 251.00x (sector avg: 0.2x). This suggests manageable leverage and moderate price volatility, making it appropriate for investors seeking a balance between growth potential and capital preservation.
LII carries a short interest score of 69/100, indicating moderate short selling activity. This is a neutral reading — not enough to signal systemic bearishness, but worth monitoring. Specific risk factors include elevated leverage (D/E: 251.00x). At $18.6B market cap (large-cap), LENNOX INTERNATIONAL INC offers reasonable institutional liquidity.
LII offers a modest dividend yield of 0.9%. While the income contribution is relatively small, even a small dividend signals management's commitment to shareholder returns and can serve as a signal of financial discipline.
LENNOX INTERNATIONAL INC is a large-cap company in the Manufacturing sector, ranked #0 of 50 in its sector (100th percentile) and #570 of 7,333 overall (92nd percentile). Key comparisons include ROE of 77.6% exceeding the -2.5% sector median and operating margins of 20.5% above the 1.3% sector average. This top-quartile standing reflects exceptional competitive strength relative to Manufacturing peers.
While LII currently exhibits a HOLD profile, superior opportunities exist within the MANUFACTURING sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
View Top Manufacturing Alpha →Quant Factor Profile
Key factor gap
Stability (77) vs Investment (34) — closing this gap could shift the rating.
EV/EBITDA 36% ABOVE SECTOR MEDIAN
ROE 3229% BELOW SECTOR MEDIAN
Gross Margin 22% BELOW SECTOR MEDIAN
AUDIT DATA AS OF SEP 30, 2025 (Q2 FY2025)
We rate LENNOX INTERNATIONAL INC (LII) as a Hold with a composite score of 61.3/100 at a current price of $558.24. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.
The rating is primarily driven by strength in stability (77th percentile) and quality (76th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (34th percentile) and momentum (40th percentile) tempers our overall conviction. We assign a Narrow Moat rating (68/100), High uncertainty, and Standard capital allocation.
Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.
LENNOX INTERNATIONAL INC holds a top-quartile position (#0 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 61.3/100 places it at rank #570 in our full 7,333-stock universe. With a $18.6B market capitalization, LENNOX INTERNATIONAL INC operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.
Revenue contraction of -2% combined with momentum at the 40th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.
The margin cascade tells an important story: gross margins of 33% (-9.2pp vs sector) narrow to operating margins of 21% (+19.3pp vs sector) and net margins of 16.1%, yielding a gross-to-net conversion rate of 48%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.
At a current price of $558.24, LENNOX INTERNATIONAL INC is trading near fair value based on current fundamentals. Our value factor score of 69/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.
The stock currently trades at a P/E of 21.6x (roughly in line with the sector median of 22.3x), EV/EBITDA of 15.6x (at a premium), P/B of 16.8x, P/S of 3.5x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.
Returns on equity of 77.6% exceed the cost of equity for most companies, indicating genuine shareholder value creation and a reinvestment engine that compounds wealth over time.
A value factor score of 69/100 suggests the market is underpricing these fundamentals, creating a potential margin of safety for new investors.
Return on assets of 22.1% indicates efficient deployment of the full asset base, not just equity capital.
Elevated leverage (251% D/E) amplifies downside risk and limits management's financial flexibility in adverse scenarios.
Revenue decline of -2% signals business deterioration — declining revenues make it difficult to grow into the current valuation and often precede further negative revisions.
We assign a High uncertainty rating to LENNOX INTERNATIONAL INC. Key risk factors include significant leverage (251% debt-to-equity). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.
Specific risk factors that inform our assessment include: significant leverage (251% debt-to-equity). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 77th percentile and quality factor at the 76th percentile provide a quantitative summary of the overall risk landscape.
Key risk mitigants include: above-average stability (77th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.
We rate LENNOX INTERNATIONAL INC's capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 77.6%, and the balance sheet is managed within acceptable parameters (D/E: 251%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; LENNOX INTERNATIONAL INC falls short on at least one dimension.
There is room for improvement in optimizing the capital structure or enhancing shareholder returns. The 0.93% dividend yield provides some income return, but the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.
In summary, LENNOX INTERNATIONAL INC receives a Hold rating with a composite score of 61.3/100 (rank #570 of 7,333). Our quantitative framework assigns a Narrow Moat (68/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 59/100.
Our analysis supports a neutral stance on LENNOX INTERNATIONAL INC. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.
Analysis derived from Blank Capital Research quantitative terminal. For informational purposes only. No trade solicitation. Past performance not indicative of future results. Consult a qualified advisor.
We assign LENNOX INTERNATIONAL INC a Narrow Moat rating with a composite moat score of 68/100. The ROIC-WACC spread of +78.4% is the primary signal of economic value creation. The company possesses identifiable competitive advantages, though they are less entrenched than those of wide-moat peers. Our analysis indicates that LENNOX INTERNATIONAL INC can sustain above-average returns on invested capital for at least 10 years, with the strongest contributor being economic value creation at 19.4/20.
The strongest moat sources are economic value creation (19.4/20) and financial resilience (18.8/20). ROIC 87.9% vs WACC 9.4% (spread +78.4%). Interest coverage 25.5x, Net debt/EBITDA 0.8x. These pillars form the core of LENNOX INTERNATIONAL INC's competitive identity and are the primary drivers of excess returns in our framework.
Areas of relative weakness include reinvestment efficiency (6.7/20) and growth durability (8.8/20). Capital turnover 5.42x, R&D intensity 2.0%. Improvement in these areas could meaningfully widen the moat over time, while deterioration would be an early warning of competitive erosion.
Our moat trend assessment is Stable. Multi-year ROIC and operating margin trajectories show neither meaningful improvement nor deterioration, suggesting the competitive position is steady. We expect LENNOX INTERNATIONAL INC's moat profile to remain largely unchanged absent a material shift in return on capital or industry dynamics.
Key profit drivers include operating margins of 21% reflecting effective cost management, declining revenues (-2%) that pressure the earnings outlook, returns on equity of 77.6% driving shareholder value creation. The margin cascade from 33% gross to 21% operating to 16.1% net reveals the company's cost structure and reinvestment intensity. Our analysis indicates that the profit engine is high-quality and likely sustainable, with the quality factor at the 76th percentile.
The margin profile shows gross margins of 33%, operating margins of 21%, net margins of 16.1%. Return metrics include ROE of 77.6% and ROA of 22.1%. Relative to the Manufacturing sector, gross margins are 9.2 percentage points below the sector median of 43%, and ROE of 77.6% compares to a sector median of -2.5%.
The balance sheet reflects high leverage with D/E of 251%, which may limit financial flexibility, a dividend yield of 0.93%, revenue growth of -2%. The sector median D/E is 0%, putting LENNOX INTERNATIONAL INC at higher leverage than the typical peer. Elevated leverage in combination with the current margin profile warrants close monitoring for any deterioration in debt-servicing capacity.
Above 50MA
37.18%
Net New Highs
+51081
Wall Street has issued downbeat forecasts for the stocks in this article. These predictions are rare - financial institutions typically hesitate to say bad things about a company because it can jeopardize their other revenue-generating business lines like M&A advisory.
In late January, Lennox International reported fourth-quarter results that missed Wall Street forecasts, with adjusted EPS of US$4.45 versus expectations of US$4.76 and revenue of US$1.20 billion compared with a US$1.30 billion consensus, as channel destocking and soft residential construction weighed on performance. Beyond the headline miss, the company’s upcoming March 4 Investor Day in the Dallas–Fort Worth area will give investors a closer look at how management plans to address these...
Low-volatility stocks may offer stability, but that often comes at the cost of slower growth and the upside potential of more dynamic companies.
Lennox International (NYSE:LII) has completed a new share repurchase tranche, buying back nearly 0.85% of its shares in the most recent quarter. This brings total buybacks under the long running program to almost 40% of the company’s outstanding shares. The latest activity reflects an ongoing focus on returning capital to shareholders through repurchases. For investors watching NYSE:LII, the scale of the buyback program is now a core part of the story. The stock closed at $529.29, with...