LII
Lennox International Inc.
$512.15
Platform & Compounding FCF
70%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 32.7% above fair value
You pay
$512.15
Bear
$272.50
Fair
$385.90
Bull
$496.10
Bear
$272.50
-46.8%
6% stage 1 growth, 11% discount
Fair
$385.90
-24.7%
10% stage 1 growth, 11% discount
Bull
$496.10
-3.1%
12% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (10% base case)
Terminal Value % of EV
39%
Implied Market Multiple
32.2x
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 $556.30 from 30 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $385.90 per share.
Warnings
Wall Street's average price target is $556.30 (from 30 analysts). Our estimate is 44% 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