LII
Lennox International Inc.
$430.02
Platform & Compounding FCF
50%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 7.4% above fair value
You pay
$430.02
Bear
$277.60
Fair
$400.33
Bull
$521.32
Bear
$277.60
-35.4%
6% stage 1 growth, 11% discount
Fair
$400.33
-6.9%
10% stage 1 growth, 11% discount
Bull
$521.32
+21.2%
13% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (10% base case)
Terminal Value % of EV
39%
Implied Market Multiple
27.5x
Market is pricing in (growth)
13.3%
vs 10.2% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $567.71 from 30 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $400.33 per share.
Warnings
Wall Street's average price target is $567.71 (from 30 analysts). Our estimate is 42% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions