Lennox: Running Too Hot, As Markets Are Still Cooling Down
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The Value InvestorInvesting Group LeaderFollow5ShareSavePlay(8min)CommentsSummaryLennox has normalized from 2024 highs, facing softer demand due to higher interest rates and construction slowdowns.Its premium valuation has moderated to ~22x earnings, but shares remain expensive relative to depressed building material peers.The NSI Industries HVAC acquisition is strategically sound, adding $225M in sales and 25% margins, with minimal impact on leverage.I remain cautious, viewing 2025 as a transition year, but see potential upside if organic growth returns and earnings approach $25/share in 2026.
Marvin Samuel Tolentino Pineda/iStock Editorial via Getty Images Shares of Lennox (LII) have seen quite some volatility recently, with its shares having been overextended at their peak in 2024, having normalized in 2025 after the business has seen rough operating conditions. This was driven by less construction and home remodeling activity, allThis article was written byThe Value Investor27.4K FollowersFollowThe Value Investor has a Master of Science with specialization in financial markets and a decade of experience tracking companies via catalytic company events. As the leader of the investing group Value In Corporate Events they provide members with opportunities to capitalize on IPOs, mergers & acquisitions, earnings reports and changes in corporate capital allocation. Coverage includes 10 major events a month with an eye towards finding the best opportunities. Learn more.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.