On July 29, 2026, Lennox International Inc (NYSE: LII) shares plunged sharply following a lowered earnings forecast and disappointing sector-wide results in heating, ventilation, and air conditioning (HVAC). The stock closed down 19% at a 52-week low amid concerns over residential demand and margin pressures.
- GF Value™ verdict: Lennox International is trading at $438.65, approximately 19.3% below its GF Value™ of $543.69, indicating it is modestly undervalued.
- GF Score™: An impressive 93/100, reflecting strong overall financial health and growth potential.
- Key financial signal: Insider activity shows net selling over the past three months, with no insider purchases and $0.5 million in shares sold.
What's Behind the News?
The HVAC sector faced significant headwinds on July 29, 2026, as Lennox International, a leading manufacturer and distributor of heating, ventilation, air conditioning, and refrigeration products, reported a reduced earnings forecast. The company cited weakening residential demand, rising tariff costs, and shrinking profit margins as key challenges. Lennox’s stock decline led the sector, with peers Watsco (WSO) and Masco (MAS) also experiencing notable drops after missing revenue and earnings expectations.
Lennox International operates primarily in the Industrials sector under the Construction industry. It serves the North American market, with 75% of sales from replacement markets and 25% from new construction. Residential HVAC solutions represent 67% of sales, while commercial HVAC accounts for the remaining 33%. The company’s market capitalization stands at $15.27 billion, reflecting its significant footprint in climate control solutions.
Is LII Overvalued or Undervalued?
According to GuruFocus’ proprietary GF Value™ metric, Lennox International is modestly undervalued by approximately 19.3%. The current share price of $438.65 is meaningfully below the intrinsic value estimate of $543.69, suggesting a margin of safety for investors who prioritize valuation discipline. This undervaluation is notable given the recent sector-wide concerns and the company’s lowered earnings guidance.
From a valuation multiples perspective, LII’s trailing twelve-month price-to-earnings (P/E) ratio stands at 19.74x, which is below its five-year median P/E of 23.7x. This compression in P/E multiples aligns with the GF Value™ indication of undervaluation, reflecting market skepticism amid short-term headwinds. Investors can explore more about GF Value™ methodology and Lennox’s valuation here.
What Does LII's GF Score™ Tell Us?
The GF Score™ is a comprehensive rating that synthesizes a company’s financial strength, profitability, growth, valuation, and momentum into a single metric to help investors gauge overall quality. Lennox International’s GF Score™ of 93 out of 100 places it among the top-tier companies in its industry, signaling robust fundamentals despite recent stock price weakness.
| Metric | Rating |
|---|---|
| GF Score™ | 93 |
| Financial Strength | 6/10 |
| Profitability | 9/10 |
| Growth | 9/10 |
| Valuation | 9/10 |
| Momentum | 7/10 |
Lennox’s strongest sub-ranks are in profitability and growth, both scoring 9 out of 10, reflecting solid operating margins and consistent earnings expansion over recent years. Its valuation rank of 9/10 further supports the view that the stock is attractively priced relative to its fundamentals. The financial strength score of 6/10 indicates moderate leverage and liquidity metrics, which investors should monitor given the current economic environment. Momentum at 7/10 suggests some recent price weakness but not an extreme downtrend. More details can be found on the LII stock page.
What Are Gurus and Insiders Doing with LII?
GuruFocus tracks 7 premium gurus holding Lennox International shares, with a nearly balanced recent activity of 4 gurus adding to their positions and 5 trimming stakes. This mixed but active guru ownership indicates continued institutional interest despite short-term challenges. Insider activity, however, shows net selling over the past three months, with no insider buying reported and approximately $0.5 million in shares sold. This insider selling may reflect caution from management or insiders amid the company’s lowered earnings outlook and sector pressures. Such ownership dynamics provide a nuanced signal for investors weighing market sentiment and insider confidence.
What This Means for Investors
Lennox International’s current valuation profile, as measured by GF Value™, suggests the stock is modestly undervalued by nearly 20%, offering a margin of safety against prevailing market concerns. The company’s high GF Score™ underscores strong profitability and growth fundamentals that have historically supported its valuation premium. However, insider selling and a moderate financial strength rating highlight areas for vigilance amid an uncertain macroeconomic backdrop and tariff-related cost pressures. Investors focused on valuation and quality metrics may find Lennox’s current price level an intriguing entry point, while those prioritizing insider sentiment might adopt a more cautious stance. For a deeper dive into Lennox’s financials and valuation, visit the LII stock page or explore opportunities using the GuruFocus Stock Screener.
Frequently Asked Questions
What is LII's GF Score™?
LII’s GF Score™ is 93 out of 100, indicating a strong overall financial profile with particular strength in profitability and growth metrics.
Is LII overvalued or undervalued?
Based on GF Value™, LII is modestly undervalued by about 19.3%, trading below its intrinsic value estimate of $543.69 compared to the current price of $438.65.
What is LII's P/E ratio compared to historical?
LII’s trailing twelve-month P/E ratio is 19.74x, which is below its five-year median P/E of 23.7x, reflecting a valuation discount relative to historical norms.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
