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Lennox (LII) Likely to Beat on Q1 Earnings: Stock to Gain?

We expect Lennox International, Inc. LII to beat expectations when it reports first-quarter 2016 results on Apr 18, before the market opens.

Why a Likely Positive Surprise?

Our proven model shows that Lennox International is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at +9.09%. This is a meaningful and leading indicator of a likely positive earnings surprise for the company.

Zacks Rank: Lennox International carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings.

Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.  

What is Driving the Better-than-Expected Results?

Lennox International offers premium and innovative climate control products in the global ventilation, heating, refrigeration and air conditioning markets. Residential Heating & Cooking, Commercial Heating & Cooking and Refrigeration are the three major business segments of the company. The company’s innovation-based business growth strategy helps it strengthen its product portfolio and makes its operations more cost effective. The company makes optimal use of resources to increase its liquidity. Lennox International also uses free cash to finance productive organic business projects, repurchase stock and raise dividend offerings. We anticipate these strategic initiatives to boost revenues and margins in the quarter under review. Based on the optimistic aspects of business, Lennox International aims to report higher revenues and earnings in the to-be-reported quarter.

However, certain industry-specific issues such as appreciating U.S. dollar and extensive business rivalry might partially offset the aforesaid positives and thus dampen earnings.

Stocks to Consider

Here are some stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Parker-Hannifin Corporation PH has an Earnings ESP of +1.39% and a Zacks Rank #2.

Sonoco Products Co. SON has an Earnings ESP of +1.67% and a Zacks Rank #2.

Colfax Corporation CFX has an Earnings ESP of +3.70% and a Zacks Rank #3.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
LENNOX INTL INC (LII): Free Stock Analysis Report
 
SONOCO PRODUCTS (SON): Free Stock Analysis Report
 
PARKER HANNIFIN (PH): Free Stock Analysis Report
 
COLFAX CORP (CFX): Free Stock Analysis Report
 
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