Lennox International Inc. (LII) — Fundamental Analysis & Key Financial Ratios

Kaplio's reading: Lennox International Inc.

Updated on October 31, 2026 · accounts published on October 28, 2026

A highly profitable industrial business with record margins

Lennox International trades at a P/E of 16.0 over the last 12 months, 42 % below its ten-year median of 27.7 and 38 % below its sector.

• Is Lennox International expensive or cheap? Its P/E of 16.0 is 42 % below its ten-year median of 27.7 and 38 % below the sector median of 25.9.
• How is the business doing? The fiscal 2025 operating margin of 19.5 % was the best in 12 years, against a 2014-2025 average of 14 %.
• How strong is the balance sheet? Net debt is 1.8× fiscal 2025 EBITDA, and the dividend has risen for 11 straight years on a 22 % payout.
• What to expect from the next earnings? Lennox International reports on January 27, 2027; analysts expect EPS of $3.74 after an October miss of 6 %.
• Does Lennox International turn its margin into cash, and at what multiple of the cycle does it trade? Free cash flow was 81 % of fiscal 2025 net income, just under the 85 % that counts as healthy for industrials.

Is Lennox International expensive or cheap?

Lennox International trades at a P/E of 16.0 over the last 12 months. That is 42 % below its ten-year median of 27.7 and close to the decade low of 15.0. The sector median is 25.9, so the stock sits 38 % below its peers. EV/EBITDA shows the same at 12.0×, against a seven-year average of 18.5×. The lower multiple comes from the share price. The stock fell 30 % in 12 months and trades 40 % below its 52-week high of $572.95, while EPS slipped only 1.4 %. A free cash flow yield of 5.4 % is what investors now get at this price.

How is the business doing?

Profitability is at its peak. The fiscal 2025 operating margin of 19.5 % was the highest of the 12 fiscal years since 2014, which averaged 14 %. Over the last 12 months it holds at 19 %. ROIC of 22 % over the last 12 months is 12.6 points above the sector median of 9.1 %, and it has stayed above 10 % in each of the last ten fiscal years. Growth is the weak spot. Over the last 12 months, revenue fell 2.7 % and EPS 1.4 % year on year. That follows revenue per share growth of 9.4 % a year from 2020 to 2025.

How strong is the balance sheet?

The company carries debt, but it is manageable. Net debt was $59.32 per share in fiscal 2025. That equals 17 % of the current share price and 1.8× EBITDA, well under the 3.0× that counts as healthy for industrials. Debt to equity of 1.6× over the last 12 months looks high, partly because the equity base is small, which also lifts ROE to 60 %. The current ratio of 1.2× is adequate, and an Altman Z of 7.5 sits well inside the safe zone. The dividend yields 1.6 %, has grown for 11 consecutive fiscal years and took only 22 % of fiscal 2025 earnings.

What to expect from the next earnings?

On October 28, 2026, Lennox International reported EPS of $6.84 against $7.29 expected, a 6 % miss. The company had beaten estimates in 6 of the last 8 quarters. Analysts have trimmed their numbers slightly since. The 2026 EPS consensus fell 1.0 % in the last 30 days, from $23.60 to $23.36 across 11 analysts, while the revenue consensus barely moved. Of the 30 analysts covering the stock, 9 rate it a buy, 17 a hold and 4 a sell, a cautious split. The January 27, 2027 report, with $3.74 of expected EPS, will show whether earnings keep softening.

Does Lennox International turn its margin into cash, and at what multiple of the cycle does it trade?

Industrials are semi-cyclical, and one good year can make earnings look better than they are. That is why the sector is judged on operating margin, conversion into free cash flow and multiples measured over a full cycle. Lennox International clears the margin bar easily: 19.5 % in fiscal 2025, against a healthy level of 12 %. Its cash conversion is borderline, with 81 % of net income turned into free cash flow against a healthy level of 85 %. Capex was 2.3 % of revenue, below the usual 4 % to 8 % range. Over the cycle, EV/EBITDA of 12.0× compares with a seven-year average of 18.5×.

How this was prepared: the data comes from companies' official filings, collected by a professional provider, and from Kaplio's analysis engine (trailing-12-month ratios, 10 years of history and sector medians computed across US-listed companies). The text is written from that data alone, every figure is checked against it before publication, and it is reviewed when the company reports results. This is not investment advice.