Is Lennox International, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Lennox International, Inc. has moved from expensive to attractive, indicating a shift in perception towards the stock's value. The company appears to be undervalued, particularly when considering its high return on equity (ROE) of 94.87% and return on capital employed (ROCE) of 56.69%. Key valuation ratios include a price-to-earnings (P/E) ratio of 59, an EV to EBITDA ratio of 43.08, and a PEG ratio of 3.14, which suggest that while the stock is priced at a premium, its strong profitability metrics may justify this valuation.
In comparison to its peers, Lennox's P/E ratio is significantly higher than Xylem, Inc. at 37.49 and Dover Corp. at 43.35, which are both considered attractive. However, it is lower than Ingersoll Rand, Inc., which is categorized as very expensive. Despite recent underperformance against the S&P 500, with a year-to-date return of -14.17% compared to the index's 13.30%, the long-term performance over three years shows a robust return of 135.90%, indicating potential for recovery and growth.