Shares of Lennox International, Inc. (LII) touched a new 52-week high of $89.16 during its trading session on Feb 18. This represents an increase over the previous high of $88.92 achieved on Feb 13.
The stock closed at $88.71 at the end of trading on Feb 18, representing a solid year-to-date return of 52.3%. The trading volume for the session was 0.39 million shares. Further upside potential exists for this Zacks Rank #2 (Buy) diversified machinery maker, as can be deduced from its earnings estimate revisions in the last 30 days and expected earnings growth of 18.2% for the next five years.
Growth Drivers
Lennox International fared well in fourth-quarter 2013. Shares of the company, since the earnings release on Feb 7, have risen 2.4% and earnings estimates were revised upwards. Earnings per share in the quarter came in at 77 cents, reflecting an increase of 37.5% over the year-ago quarter and 4 cents above the Zacks Consensus Estimate.
Revenues grew 9.4% year over year due to volume gains. The company’s Residential Heating & Cooling segment recorded 17.6% growth in sales, while the Commercial Heating & Cooling segment reported sales hike of 13.4%. The growth momentum got restricted as the Refrigeration segment revenues decreased 7.3%. Gross margin improved 310 basis points year over year.
For 2014, Lennox International anticipates revenues to grow in the 3–7% range. Adjusted earnings per share are predicted in the $4.20–$4.60 range, up 14–24% from $3.70 recorded in 2013. The company intends to spend $90 million as capital expenditure and repurchase shares worth $150 million.
Impressive fourth-quarter 2013 results and guidance for 2014 coupled with positive average earnings surprise of 10.2% have led to expectation of a better performance in the quarters ahead. Currently, Lennox International has an Earnings ESP of +0.22% for 2014 and +0.76% for 2015.
Estimate Revisions Show Potency
Expectation of better performance in the quarters ahead led to positive revisions in earnings estimates. In the last 30 days, the Zacks Consensus Estimate for Lennox International increased 1.1% to $4.50 for 2014 and 1.7% to $5.27 for 2015.
Lennox International currently has a $4.3 billion market capitalization and carries a Zacks Rank #2 (Buy). Other stocks in the industry that have the same Zacks Rank as Lennox include CommScope Holding Company, Inc. (COMM), Graco Inc. (GGG) and Middleby Corp. (MIDD).
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