As of June 3, 2025, Lennox International Inc's estimated intrinsic value ranges from $171.40 to $840.65 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $840.65 | +52.4% |
| Discounted Cash Flow (5Y) | $670.90 | +21.6% |
| Dividend Discount Model (Multi-Stage) | $532.35 | -3.5% |
| Dividend Discount Model (Stable) | $342.91 | -37.9% |
| Earnings Power Value | $171.40 | -68.9% |
Is Lennox International Inc (LII) undervalued or overvalued?
With the current market price at $551.78, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Lennox International Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.91 | 1.01 |
| Cost of equity | 8.1% | 10.5% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 19.1% | 19.5% |
| Debt/Equity ratio | 0.06 | 0.06 |
| After-tax WACC | 7.8% | 10.2% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $671 | $24,736M | 77.7% |
| 10-Year Growth | $841 | $30,759M | 61.3% |
| 5-Year EBITDA | $544 | $20,229M | 72.7% |
| 10-Year EBITDA | $705 | $25,958M | 54.1% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $620M |
| Discount Rate (WACC) | 10.2% - 7.8% |
| Enterprise Value | $6,091M - $7,936M |
| Net Debt | $932M |
| Equity Value | $5,159M - $7,004M |
| Outstanding Shares | 35M |
| Fair Value | $145 - $197 |
| Selected Fair Value | $171.40 |
| Metric | Value |
|---|---|
| Market Capitalization | $19577M |
| Enterprise Value | $20509M |
| Trailing P/E | 24.38 |
| Forward P/E | 20.20 |
| Trailing EV/EBITDA | 9.40 |
| Current Dividend Yield | 80.94% |
| Dividend Growth Rate (5Y) | 7.94% |
| Debt-to-Equity Ratio | 0.06 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $252.20 |
| Discounted Cash Flow (5Y) | 25% | $167.73 |
| Dividend Discount Model (Multi-Stage) | 20% | $106.47 |
| Dividend Discount Model (Stable) | 15% | $51.44 |
| Earnings Power Value | 10% | $17.14 |
| Weighted Average | 100% | $594.97 |
Based on our comprehensive valuation analysis, Lennox International Inc's weighted average intrinsic value is $594.97, which is approximately 7.8% above the current market price of $551.78.
Key investment considerations:
Given these factors, we believe Lennox International Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.