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Lennox International Inc. (NYSE:LII): What Are The Future Prospects?

Terrence Jolly

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Looking at Lennox International Inc.’s (NYSE:LII) earnings update in September 2018, the consensus outlook from analysts appear highly confident, with profits predicted to ramp up by an impressive 50% next year, relative to the previous 5-year average growth rate of 14%. Currently with trailing-twelve-month earnings of US$307m, we can expect this to reach US$462m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Lennox International in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

View our latest analysis for Lennox International

Exciting times ahead?

The longer term view from the 14 analysts covering LII is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of LII’s earnings growth over these next few years.

NYSE:LII Future Profit February 5th 19

By 2022, LII’s earnings should reach US$429m, from current levels of US$307m, resulting in an annual growth rate of 13%. This leads to an EPS of $12.21 in the final year of projections relative to the current EPS of $7.28. In 2022, LII’s profit margin will have expanded from 8.0% to 11%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Lennox International, there are three pertinent factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Lennox International worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Lennox International is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Lennox International? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.