(LII) Lennox International – Fundamentals Are Improving

March 4th, 2010

Lennox International (LII) delivered better-than-expected results for the fourth quarter, and analysts have been raising their estimates for 2010 and 2011.

Company Description

Lennox is a leading global provider of climate control solutions. The company designs, manufactures and markets a broad range of products for the heating, ventilation, air conditioning (HVAC) and refrigeration markets. The company’s products are sold under brand names that include Lennox, Armstrong Air, Bohn, Larkin, and Heatcraft.

The Zacks Rank #2 stock has a dividend yield of 1.3%.

Fundamentals Are Improving

The company indicated that its end markets continued to show improvement in the fourth quarter of 2009. Its residential HVAC end markets are seeing strong growth. However, its commercial HVAC and refrigeration markets were still down from a year ago, but the rate of decline continued to slow in the fourth quarter.

Additionally, the company’s continued focus on productivity helped to expand profit margins and drive adjusted EPS growth of 12% in the fourth quarter.

Fourth-Quarter Results

On Feb 4, Lennox had fourth-quarter sales of $733 million, flat with the year-ago quarter. The company also reported earnings per share from continuing operations of $0.58, up from $0.52 in the year-ago quarter and $0.10 ahead of the Zacks Consensus Estimate.

Management reiterated its 2010 outlook, which is originally provided on December 16. The company expects revenue growth of 3% to 7% and adjusted EPS from continuing operations of $1.85-$2.25.

Estimates Trending Higher

In the last 30 days, analysts increased their earnings estimates for both 2010 and 2011. The Zacks Consensus Estimate for 2010 has gone from $2.11 to $2.17, while the 2011 Zacks Consensus Estimate has moved from $2.64 to $2.76.

Zacks Investment Research

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Read more on Lennox International, Chun Yuan Steel at Wikinvest

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