Lennox Earnings: Commercial Business Is Recovering; 2023 Full-Year Guidance Maintained

Lennox reported solid first-quarter results that featured 3% core revenue growth (that is, excluding European operations, which will be divested) and good margin expansion (adjusted operating margin expanded 210 basis points to 14.4%). Lennox maintained its 2023 full-year outlook, which sees 0%-4% core revenue growth, adjusted EPS of $14.25-$15.25, and $250 million-$350 million of free cash flow. Our long-term outlook for Lennox is unchanged, but we’ll likely increase our $260 per share fair value estimate by a low-single-digit percentage due to the time value of money.