Lennox International - Growth & Income

Lennox International (LII) recently beat quarterly estimates and raised guidance for the full year. The company indicated that the success of its new products and productivity initiatives across its businesses helped expand its profit margins to record highs.

Growth and Income

The company is expected to grow its earnings per share 39.1% in 2010, 22.2% in 2011, and 17.5% over the long term. Its trailing 12-month return on equity is 23.3%. The stock also offers investors a dividend yield of 1.3%.

This Zacks #1 Rank stock trades at 19x 2010 consensus EPS estimates and 15x 2011 consensus EPS estimates.

Business

Lennox International designs, manufactures, and markets a range of products for heating, ventilation, air conditioning, and refrigeration markets in the United States, Canada, and internationally.

Recent News

On July 27, Lennox had second-quarter revenue of $872 million, up 11% from the year-ago quarter. The company had EPS of $0.97, topping the Zacks Consensus by 13 cents, or 15.5%. In the last three quarters, Lennox has beaten the Zacks Consensus Estimate by 179%

CEO Todd Bluedorn said, "All business segments realized strong revenue and profit growth in the second quarter on solid operational execution and improved end market conditions from a year ago."

Guidance

Looking ahead, the company is encouraged by the improved end market conditions, but Lennox remains mindful of global economic uncertainties and higher commodities prices. For the full year, management raised its revenue growth guidance to 5%-8% and adjusted EPS growth of 24%-38% over last year.

Estimates

In the last month, the Zacks Consensus Estimate for 2010 has increased 15 cents, or 6.5%, to $2.46. The Zacks Consensus Estimate for 2011 has climbed 13 cents, or 4.5%, to $3.01.

The Chart

Lennox shares peaked in late April around $51. Its stock sold off with the overall market, and it has been in trading range since May. The low end of the range is $41-$42, while the high end of the range is $46. A break above the $46 level would be bullish and should take the stock back up to its highs of the year. A break below the 200-day, which has provided support for the last three months, would be negative.

 
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