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Lennox Reaches a New 52-Week High

Zacks Equity Research

Shares of Lennox International, Inc. (LII) hit a 52-week high of $80.69 on Nov 11, and eventually closed at $80.13. Shares of this building products manufacturer have been on a rise since it announced improved year-over-year results for the third quarter of 2013, on Oct 21.

Year-to-date, share prices have recorded a healthy return of 48.6%. The company’s long-term estimated earnings per share growth rate is 21.4%. Average volume of shares traded over the last three months came in at 425.2K.

In third-quarter 2013, adjusted earnings per share for the company was $1.30, beating the Zacks Consensus Estimate of $1.26 by 3.2%. Results also surpassed the year-ago earnings by 34.0%. Lennox announced 8.0% year-over-year increase in revenues to $868.0 million in the reported quarter. The year-over-year rise was mainly the result of better volumes and price/mix.

Lennox experienced a year-over-year hike in revenues for two out of three segments. The Residential Heating & Cooling segment’s sales increased 12% year over year on the back of better volume and price mix. The Commercial Heating & Cooling segment recorded sales improvement of 9% compared with the year -ago quarter, driven by better volumes. However, lower volumes reduced the Refrigeration segment’s sales by 4% year over year.

Based on the results, management reiterated its revenue growth guidance in the range of 6%–8% for 2013. Adjusted earnings per share for the year are estimated in the range of $3.50–$3.75 against $3.45–$3.75 projected earlier.

Lennox also renewed tax rate guidance to the band of 34%–35% for the full year. Capital expenditures guidance for the year was maintained at $60.0 million including stock repurchase plans presently worth $125.0 million.

Other Stocks to Consider

Lennox currently carries a Zacks Rank #3 (Hold). Other stocks worth a watch in the industry include Comfort Systems USA Inc. (FIX), CaesarStone Sdot-Yam Ltd. (CSTE) and Quanex Building Products Corp. (NX). While Comfort Systems and CaesarStone Sdot-Yam carry a Zacks Rank #1 (Strong Buy), Quanex Building Products holds a Zacks Rank #2 (Buy).

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