DCF Studio

    LII · NYQ · Industrials

    Lennox International Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 310.32

    Market price

    USD 353.64

    Implied upside

    -12.3%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 3.1% of revenue against depreciation of 1.8%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 310.32-12.3%
    Exit multiple
    USD 329.84-6.7%
    Market price
    USD 353.64

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 5.5bnUSD 5.8bnUSD 6.1bnUSD 6.4bnUSD 6.7bnUSD 6.9bnUSD 7.2bnUSD 7.4bnUSD 7.6bnUSD 7.8bn+4.0%
    EBITUSD 973.5mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.4bn+4.0%
    NOPATUSD 786.4mUSD 829.1mUSD 871.1mUSD 912.1mUSD 951.6mUSD 989.4mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.1bn+4.0%
    Add depreciation & amortisationUSD 100.7mUSD 106.2mUSD 111.6mUSD 116.8mUSD 121.9mUSD 126.7mUSD 131.3mUSD 135.5mUSD 139.4mUSD 142.9m+4.0%
    Less capital expenditureUSD -172.1mUSD -178.7mUSD -184.8mUSD -190.4mUSD -195.5mUSD -199.9mUSD -203.6mUSD -206.7mUSD -208.9mUSD -210.4m+2.3%
    Capex, % of revenue3.1%3.1%3.0%3.0%2.9%2.9%2.8%2.8%2.7%2.7%-
    Less increase in working capitalUSD -59.6mUSD -58.3mUSD -57.3mUSD -55.8mUSD -53.9mUSD -51.5mUSD -48.6mUSD -45.2mUSD -41.4mUSD -37.1m-5.1%
    Free cashflow to firmUSD 655.4mUSD 698.4mUSD 740.6mUSD 782.7mUSD 824.2mUSD 864.7mUSD 904.1mUSD 941.8mUSD 977.6mUSD 1.0bn+4.9%
    Discount factor0.95780.87870.80610.73950.67840.62240.57100.52380.48050.4408-
    Present valueUSD 627.8mUSD 613.7mUSD 597.0mUSD 578.8mUSD 559.1mUSD 538.2mUSD 516.2mUSD 493.3mUSD 469.8mUSD 445.7m-
    Present Value Of The ForecastUSD 5.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.135Reported 1.202, pulled toward 1.0 (Blume)
    Cost of equity9.70%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 22.7x interest cover. Book interest / average debt was lower, at 2.8%.
    Market capitalisationUSD 12.1bn87.2% of capital
    Total debtUSD 1.8bn12.8% of capital, book value as a proxy
    Tax rate19.2%Effective, capped at statutory
    WACC9.00%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 310.32

    57% of EV

    Forecast FCFF, final year
    USD 1.0bn
    Capex at depreciation, working capital in reinvestment
    USD 1.1bn
    Less reinvestment at g/ROIC (6.1% of NOPAT)
    USD -67.5m
    Capitalised
    USD 1.0bn
    ROIC (reported)
    41.3%
    Terminal value, undiscounted
    USD 16.5bn
    Terminal value, discounted
    USD 7.3bn
    Enterprise value
    USD 12.7bn
    Less net debt
    USD 1.7bn
    Equity value
    USD 11.0bn

    Exit at 11.9x EBITDA

    Value per shareUSD 329.84

    59% of EV

    Terminal value, undiscounted
    USD 18.1bn
    Terminal value, discounted
    USD 8.0bn
    Enterprise value
    USD 13.4bn
    Less net debt
    USD 1.7bn
    Equity value
    USD 11.7bn

    Spread between methods: 6%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.00%415.40441.21472.95512.84564.38
    8.00%341.60357.65376.77399.88428.31
    9.00%287.68298.13310.31324.66341.77
    10.00%246.60253.63261.70271.03281.91
    11.00%214.30219.13224.61230.88238.07

    Outlined: this model. Green text: above today's price of 353.64. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year3.3%4.2%5.6%
    EBIT margin20.3%17.7%19.7%
    Discount rate-9.0%8.3%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.