Lennox International Inc. (NYSE:LII), a climate control products manufacturer, is at a cyclical trough in the residential HVAC market. The company missed Q4 2025 estimates, with adjusted EPS of $4.45 vs. $4.79 expected. Revenue fell 2% YoY to $5.26 billion.
Lennox switched from LIFO to FIFO accounting, complicating comparisons. The residential HVAC market is under pressure, with replacement demand declining. Analysts expect a cyclical bottom in early 2026. Lennox is pursuing joint ventures (Samsung, Artison) to regain market share.
Margin expansion is a bright spot: 77% ROE and 33% gross margin. The stock appears undervalued per Bond.az analysis, with ~10% upside potential. However, market share losses and regulatory uncertainty pose risks. Cyclical recovery could drive a re-rating.
