LII Intrinsic Value

LII

Lennox International Inc – Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing

lennox international inc., through its subsidiaries, designs, manufactures, and markets a range of products for the heating, ventilation, air conditioning, and refrigeration markets in the united states, canada, and europe. the company operates in three segments: residential heating & cooling, commercial heating & cooling, and refrigeration. the residential heating & cooling segment provides furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment and accessories, comfort control products, and replacement parts and supplies for residential replacement and new construction markets. the commercial heating & cooling segment offers unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, and variable refrigerant flow commercial products for light commercial markets, as well as rooftop units, split system/air handler combinations, and variable refrigerant

Analysis Results

Intrinsic Value	$405.78
Latest Price	$378.50
Relative Value	7% undervalued

Share results:

Thoughts on this result? Let us know.

Cash Flow (Billions)

Analysis Parameters

New Ticker

Analysis Details

Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 16.0%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 9.6%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 16.0%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year	Future flow (billion)	Present value (billion)
2023	0.758	0.692
2024	0.88	0.732
2025	1.02	0.774
2026	1.18	0.818
2027	1.37	0.865

Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 18.3 billion. This corresponds to a present value of 10.5 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 3.88 billion. Adding in the terminal value gives a total present value of 14.4 billion.

There are presently 35.5 million outstanding shares, so the intrinsic value per share is 405.78.

Financial Statements

The following data was to determine the past cash flows.

Current Assets	1,496,500,000
Current Cash	61,100,000
Current Liabilities	1,595,700,000
Current Debt	710,600,000
Non-Cash Working Capital (NCWC)	550,300,000
Change in NCWC	227,200,000
EBIT	662,600,000
Tax Provision	118,700,000
Depreciation and Amortization	77,900,000
Capital Expenditure	-101,100,000
Unlevered Free Cash Flow	738,878,954

Current Assets	1,175,400,000
Current Cash	36,500,000
Current Liabilities	827,100,000
Current Debt	11,300,000
Non-Cash Working Capital (NCWC)	323,100,000
Change in NCWC	55,900,000
EBIT	601,300,000
Tax Provision	96,100,000
Depreciation and Amortization	72,400,000
Capital Expenditure	-106,800,000
Unlevered Free Cash Flow	519,631,048

Current Assets	1,087,600,000
Current Cash	129,000,000
Current Liabilities	701,300,000
Current Debt	9,900,000
Non-Cash Working Capital (NCWC)	267,200,000
Change in NCWC	-132,700,000
EBIT	499,800,000
Tax Provision	88,100,000
Depreciation and Amortization	72,600,000
Capital Expenditure	-78,500,000
Unlevered Free Cash Flow	262,295,283

Current Assets	1,120,900,000
Current Cash	40,200,000
Current Liabilities	1,002,700,000
Current Debt	321,900,000
Non-Cash Working Capital (NCWC)	399,900,000
Change in NCWC	64,500,000
EBIT	507,300,000
Tax Provision	99,100,000
Depreciation and Amortization	71,100,000
Capital Expenditure	-105,600,000
Unlevered Free Cash Flow	438,317,070

Current Assets	1,089,400,000
Current Cash	46,300,000
Current Liabilities	1,008,500,000
Current Debt	300,800,000
Non-Cash Working Capital (NCWC)	335,400,000
Change in NCWC	-112,700,000
EBIT	515,000,000
Tax Provision	107,600,000
Depreciation and Amortization	66,000,000
Capital Expenditure	-95,200,000
Unlevered Free Cash Flow	254,668,711

Current Assets	1,137,300,000
Current Cash	68,200,000
Current Liabilities	654,500,000
Current Debt	33,500,000
Non-Cash Working Capital (NCWC)	448,100,000
Change in NCWC	128,500,000
EBIT	505,900,000
Tax Provision	156,900,000
Depreciation and Amortization	64,600,000
Capital Expenditure	-98,300,000
Unlevered Free Cash Flow	429,631,659

Current Assets	1,005,900,000
Current Cash	50,200,000
Current Liabilities	888,600,000
Current Debt	252,500,000
Non-Cash Working Capital (NCWC)	319,600,000
Change in NCWC	9,000,000
EBIT	473,900,000
Tax Provision	124,100,000
Depreciation and Amortization	58,100,000
Capital Expenditure	-84,300,000
Unlevered Free Cash Flow	310,658,306

Current Assets	938,200,000
Current Cash	38,900,000
Current Liabilities	824,000,000
Current Debt	235,300,000
Non-Cash Working Capital (NCWC)	310,600,000
Change in NCWC	-89,200,000
EBIT	380,300,000
Tax Provision	95,400,000
Depreciation and Amortization	62,800,000
Capital Expenditure	-69,900,000
Unlevered Free Cash Flow	155,618,471

Current Assets	1,014,000,000
Current Cash	37,500,000
Current Liabilities	827,300,000
Current Debt	250,600,000
Non-Cash Working Capital (NCWC)	399,800,000
Change in NCWC	82,200,000
EBIT	343,400,000
Tax Provision	109,500,000
Depreciation and Amortization	60,800,000
Capital Expenditure	-88,400,000
Unlevered Free Cash Flow	279,604,848

Current Assets	902,400,000
Current Cash	38,000,000
Current Liabilities	714,000,000
Current Debt	167,200,000
Non-Cash Working Capital (NCWC)	317,600,000
Change in NCWC	-13,700,000
EBIT	303,300,000
Tax Provision	94,400,000
Depreciation and Amortization	58,900,000
Capital Expenditure	-78,300,000
Unlevered Free Cash Flow	165,819,686

Current Assets	987,100,000
Current Cash	51,800,000
Current Liabilities	639,600,000
Current Debt	35,600,000
Non-Cash Working Capital (NCWC)	331,300,000
Change in NCWC	40,500,000
EBIT	225,800,000
Tax Provision	66,700,000
Depreciation and Amortization	55,400,000
Capital Expenditure	-50,200,000
Unlevered Free Cash Flow	196,830,391

This analysis is provided for informational purposes only and does not constitute financial or investing advice. For more information on the advantages and limitations of DCF analysis see background. This information is provided on an "as is" basis. No warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. By using this site you agree that under no circumstances shall Valuation Tools LLC be held liable for any loss or damage caused by information obtained from this website including any articles, data, videos, its social media accounts, or any other materials.