Is Lennox International, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Lennox International, Inc. moved from expensive to attractive, indicating a shift towards a more favorable assessment. The company appears to be undervalued, particularly when considering its P/E ratio of 59, which is higher than the industry average, and a PEG ratio of 3.14, suggesting that the stock may not be growing fast enough to justify its price. Additionally, the EV to EBITDA ratio stands at 43.08, which further emphasizes the premium valuation relative to earnings.
In comparison to its peers, Lennox International's P/E ratio is significantly higher than Xylem, Inc. at 37.49 and Dover Corp. at 43.35, both of which are categorized as attractive. Despite this, Lennox's high ROE of 94.87% and ROCE of 56.69% indicate strong profitability metrics that could justify its valuation. Notably, while Lennox has experienced a decline in stock returns year-to-date (-14.17%) and over the past year (-13.35%), it has outperformed the S&P 500 over the last three years with a return of 135.90% compared to the index's 81.19%.