Lennox International

Methodology

Lennox's earnings can be volatile due to cyclicality in residential and commercial construction markets, making it essential to use normalized mid-cycle earnings rather than peak or trough figures. The company's focus on HVAC replacements provides more stability than new construction exposure. Evaluate earnings power across a full construction cycle for meaningful fair value estimates.

Methodology

Lennox often trades at premium PEG ratios reflecting strong market positions in efficient HVAC systems and recurring replacement demand. During construction booms, low PEG ratios can be misleading if based on peak earnings. Compare to both HVAC peers and the company's historical range while adjusting for cycle position.

Methodology

With modest dividends supplementing capital appreciation potential, PEGY provides a more complete picture of shareholder returns for Lennox. Management focuses on balanced capital allocation between dividends, buybacks, and growth investments. The dividend component helps stabilize total return during construction cycle downturns.