Is Lennox International Inc. (LII) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $349.47, Lennox International Inc. (LII) trades 14% below TickerWorth's blended fair value of $404.12 per share — a discounted-cash-flow model cross-checked against peer multiples and asset value — meaning the market currently prices LII undervalued vs our estimate of what the business is intrinsically worth. Our fair value sits above the market, an implied +15.6% move to close the gap if the business performs in line with our assumptions. This is an educational model, not a price target or a recommendation — the value moves with the inputs, which you can test yourself using the WACC slider below.
One of the lenses behind that blended figure is a discounted-cash-flow model, which on its own values LII at about $281.97 per share. The rest of this page walks through that DCF — its assumptions, reverse-DCF and discount-rate sensitivity — because it is the auditable anchor of the blend.
The valuation discounts Lennox International Inc.'s projected free cash flows at a weighted-average cost of capital (WACC) of 10.3%, with a long-run terminal growth rate of 2.5%. About 71% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly 12.0% annual revenue growth for LII. Our base case instead compounds to about 5.5% a year over the same forecast, so the market is pricing in materially faster growth than our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, LII's modeled DCF value ranges from about $207.38 to $425.99 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what Lennox International Inc. would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of LII's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind LII's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $5,195,300,000 | Lennox FY2025 10-K (accession 0001069202-26-000028, filed 2026-02-17), calendar year ended 2025-12-31; Q4/FY2025 results 8-K Ex-99.1 (accession 0001069202-26-000005, 2026-01-28): Net sales $5,195.3M, -2.7% on FY2024's $5,341.3M (both restated for the Q4 2025 switch from LIFO to FIFO inventory accounting). Segments: Home Comfort Solutions (residential HVAC) $3,343.4M (64%, -7%) and Building Climate Solutions (commercial HVAC + refrigeration) $1,851.9M (36%, +5%). The decline is the R-454B refrigerant transition unwinding: 2024 carried a pre-buy of R-410A equipment before the 1 Jan 2025 manufacturing cutover, and 2025 carried channel destocking (Q4 2025 HCS revenue -21%). Includes ~one quarter of Duro Dyne and Supco (HVAC parts and supplies, acquired October 2025 for $545.0M net of cash). History (XBRL Revenues): $3,642M (FY2016), $3,634M (FY2020), $4,194M (2021), $4,718M (2022), $4,982M (2023), $5,341M (2024) - a ~4.0% ten-year CAGR. UNCHANGED as the base; the DCF grows it by forecast.revenue_growth. CROSS-CHECK, latest quarter (8-K Ex-99.1, 2026-07-29, accession 0001069202-26-000085): H1 2026 net sales $2,680.4M, +4.2% on H1 2025's $2,573.5M - HCS -8.4% ($1,585.6M; Q2 residential unit volumes -12%, Q1 -21%), BCS +29.9% ($1,094.8M; Q2 organic +15%, acquisitions +9pt). TTM to 2026-06-30: $5,302.2M. |
| Base EBIT margin | 20.1% | Lennox Q4/FY2025 earnings release, 8-K Ex-99.1 (accession 0001069202-26-000005, filed 2026-01-28) + FY2025 10-K XBRL (us-gaap:OperatingIncomeLoss): GAAP operating income $1,041.5M / $5,195.3M = 20.05%. Includes $10.3M of Duro Dyne/Supco acquisition costs and $6.8M of restructuring (management's 'total segment profit', after corporate cost, was $1,057.7M = 20.4%). A RECORD, NOT A MID-CYCLE NUMBER: on the same XBRL tag the margin was 11.8% (FY2016), 12.9% (2017), 13.1% (2018), 17.3% (2019, lifted by a disposal gain), 13.2% (2020), 14.1% (2021), 13.9% (2022), 15.9% (2023), 19.5% (2024), 20.0% (2025). The 2023-25 step-up came from price and mix (the higher-priced R-454B product line, tariff and inflation pricing) and cost actions while volumes FELL ($255M volume headwind in FY2025 segment profit vs $356M of mix/price). The model treats ~20% as the new base, not the old 13-14% average - see the margin path. CROSS-CHECK, H1 2026 (8-K Ex-99.1, 2026-07-29): operating income $518.5M / $2,680.4M = 19.3% vs 20.1% in H1 2025; Q2 23.0% (-30bp) included $30M of one-off tariff refunds (~1.9pt of Q2 sales). |
| Forecast revenue growth | 8% → 6% → 5% → 4% → 4% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | US 10Y Treasury constant maturity (FRED DGS10): 5.24% on 2026-10-01, the latest published observation; the program-wide rate shared by every researched model in this run. |
| Beta | 1.16 | Yahoo Finance 5Y-monthly beta via yfinance, read 2026-10-05: Published 5Y-monthly beta 1.163, used AS IS - the same no-normalization policy as A. O. Smith (1.11) and Masco in this tracker. Plausible for an HVAC maker with ~64% of sales in residential equipment tied to housing turnover, consumer credit and refrigerant-rule cycles, and a share price that has fallen ~38% from its 52-week high. A 'mostly replacement demand' argument would push it lower. Each 0.1 of beta is worth roughly $19/share (1.063 gives ~$302; 1.263 ~$264); today's price needs a beta of ~0.83 (see what_market_believes). |
| Terminal growth | 2.5% | Assumption — house default: House default 2.5% (roughly long-run nominal GDP), kept for comparability with A. O. Smith, Pentair and every other model. Arguably mildly conservative for Lennox, whose sales compounded ~4.0% a year FY2016-25 and which keeps buying bolt-ons, and arguably generous for a company whose terminal-year margin is at a record. Must remain < WACC of ~10.30%. |
| Diluted shares | 35M | Lennox Q2 2026 10-Q (accession 0001069202-26-000087), earnings-per-share note: Q2 2026 weighted-average diluted shares 34.8M (basic 34.7M + 0.1M dilutive awards; H1 34.9M; FY2025 35.4M; FY2016 ~44M). 34.56M were outstanding at 2026-06-30. The count falls ~1.5% a year: $482.3M of buybacks in FY2025 and $151.3M in H1 2026. Using the weighted Q2 count is the house rule and slightly conservative: 34.56M would add ~$2/share. |
| Market price | $349.47 | Delayed quote · as of 2026-11-10 04:59 UTC |
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