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Lennox (LII) Q4 Earnings: What's in Store for the Stock?

Lennox International, Inc.LII is slated to release fourth-quarter and full-year 2016 results on Feb 7, 2017, before the market opens.

Over the last three months, Lennox International's shares recorded a return of 7.45% - underperforming 12.49% return provided by the Zacks categorized Building Products-Air Conditioner/Heating industry.

However, the company has recorded a positive earnings surprise of 3.14% for the last four trailing quarters, beating estimates in three out of four.

Let's see how things are shaping up prior to this announcement.

Factors to Play

Lennox International engages in designing, manufacturing and marketing of climate control solutions. Its technologically advanced products are primarily used in the heating, ventilation, air conditioning and refrigeration end-markets.

The company anticipates generating higher revenues in the quarter to reported on the back of improved sales volume and favorable price/mix. Notably, full-year 2016 revenue growth guidance has been narrowed down to 4%-6% from previously estimated range of 3%-7%.

Lennox International expects to report higher earnings in fourth-quarter and full-year 2016 on grounds of increased revenues, improved operations and strategic cost-management initiatives. Full-year 2016 adjusted earnings guidance range has been raised to $6.75-$6.95 per share from $6.50-$6.90 per share.

In addition, the company remains committed toward rewarding its shareholders through dividends and share buybacks.

Under the ongoing de-risking pension obligation plan, the company intends to reduce pension obligations by roughly $50 million at the end of 2016. Moreover, the company estimates to incur capital expenditure of roughly $95 million for 2016 and expects to generate free cash flow roughly $200 million at the end of 2016.

However, the benefits or targets accrued from the above mentioned moves might be hurt due to certain headwinds in the market. For instance, Lennox International foresees experiencing foreign currency headwind worth $5 million in 2016. Additionally, stiff industry rivalry or any sort of supply chain challenge might weigh over the top- and bottom-line results in the quarter under review.

Earnings Whispers

Our proven model does not conclusively show that Lennox International is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as we will see below.

Zacks ESP: Lennox International currently has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at $1.40 per share.

Lennox International, Inc. Price and EPS Surprise

Lennox International, Inc. Price and EPS Surprise | Lennox International, Inc. Quote

Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: Lennox International carries a favorable Zacks Rank #2. However, a 0.00% ESP makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some stocks within the industry that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

AECOM ACM , with an Earnings ESP of +1.89%, and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Chicago Bridge & Iron Company N.V. CBI , with an Earnings ESP of +3.45%, and a Zacks Rank #2.

Century Communities, Inc. CCS , with an Earnings ESP of +14.93%, and a Zacks Rank #2.

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Lennox International, Inc. (LII): Free Stock Analysis Report

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AECOM (ACM): Free Stock Analysis Report

Century Communities, Inc. (CCS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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