Will This Ratings Upgrade Help Lennox International (LII) Stock Today?

NEW YORK (TheStreet) --Lennox International Inc. (LII) was upgraded to "buy" from "neutral" at Goldman Sachs (GS) on Wednesday.

The firm said it raised its rating on the company, which provides climate control solutions, as Lennox is cutting costs and is leveraged to strong residential markets.

Goldman upped its price target on Lennox stock to $102 from $93.

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Separately, TheStreet Ratings team rates LENNOX INTERNATIONAL INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate LENNOX INTERNATIONAL INC (LII) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • LII's revenue growth has slightly outpaced the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 5.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.25% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LII should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • LENNOX INTERNATIONAL INC has improved earnings per share by 19.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LENNOX INTERNATIONAL INC increased its bottom line by earning $3.55 versus $2.64 in the prior year. This year, the market expects an improvement in earnings ($4.50 versus $3.55).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Building Products industry and the overall market, LENNOX INTERNATIONAL INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has slightly increased to $51.60 million or 5.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -27.94%.
  • You can view the full analysis from the report here: LII Ratings Report
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