Dj Vp Kosel Registers 200 Of Lennox International Inc >Lii

Have you been paying attention to shares of Lennox International (LII)? Shares have been on the move with the stock up 4.5% over the past month. The stock hit a new 52-week high of $636.25 in the previous session. Lennox International has gained 41% since the start of the year compared to the 28.2% move for the Zacks Construction sector and the 55.8% return for the Zacks Building Products - Air Conditioner and Heating industry.

What's Driving the Outperformance?

The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 23, 2024, Lennox reported EPS of $6.68 versus consensus estimate of $5.95.

For the current fiscal year, Lennox is expected to post earnings of $21.04 per share on $5.22 billion in revenues. This represents a 17.15% change in EPS on a 4.81% change in revenues. For the next fiscal year, the company is expected to earn $23.35 per share on $5.58 billion in revenues. This represents a year-over-year change of 10.97% and 6.92%, respectively.

Valuation Metrics

Lennox may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Lennox has a Value Score of D. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 30X current fiscal year EPS estimates, which is not in-line with the peer industry average of 35.6X. On a trailing cash flow basis, the stock currently trades at 30.9X versus its peer group's average of 36.1X. Additionally, the stock has a PEG ratio of 1.94. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Lennox currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Lennox passes the test. Thus, it seems as though Lennox shares could have potential in the weeks and months to come.

Zacks Investment Research

The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) was launched on 09/09/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Mid Cap Growth segment of the US equity market.

The fund is sponsored by Vanguard. It has amassed assets over $1.07 billion, making it one of the average sized ETFs attempting to match the Mid Cap Growth segment of the US equity market.

Why Mid Cap Growth

With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. These types of companies, then, have a good balance of stability and growth potential.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Further, growth stocks have a higher level of volatility associated with them. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 29.90% of the portfolio. Consumer Discretionary and Information Technology round out the top three.

Looking at individual holdings, Carlisle Cos Inc (CSL) accounts for about 1.38% of total assets, followed by Lennox International Inc (LII) and Emcor Group Inc (EME).

The top 10 holdings account for about 8.43% of total assets under management.

Performance and Risk

IVOG seeks to match the performance of the S&P MidCap 400 Growth Index before fees and expenses. The S&P MidCap 400 Growth Index measures the performance of growth stocks of medium-size U.S. companies.

The ETF has gained about 15.16% so far this year and it's up approximately 32.95% in the last one year (as of 11/01/2024). In the past 52-week period, it has traded between $87.33 and $117.16.

The ETF has a beta of 1.08 and standard deviation of 20.96% for the trailing three-year period, making it a medium risk choice in the space. With about 257 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard S&P Mid-Cap 400 Growth ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IVOG is an excellent option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Vanguard Mid-Cap Growth ETF (VOT) and the iShares Russell Mid-Cap Growth ETF (IWP) track a similar index. While Vanguard Mid-Cap Growth ETF has $14.26 billion in assets, iShares Russell Mid-Cap Growth ETF has $15.82 billion. VOT has an expense ratio of 0.07% and IWP charges 0.23%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research

Investors interested in Construction stocks should always be looking to find the best-performing companies in the group. Comfort Systems (FIX) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? By taking a look at the stock's year-to-date performance in comparison to its Construction peers, we might be able to answer that question.

Comfort Systems is a member of our Construction group, which includes 88 different companies and currently sits at #13 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Rank of the individual stocks within the sector to gauge the strength of each group.

The Zacks Rank emphasizes earnings estimates and estimate revisions to find stocks with improving earnings outlooks. This system has a long record of success, and these stocks tend to be on track to beat the market over the next one to three months. Comfort Systems is currently sporting a Zacks Rank of #2 (Buy).

The Zacks Consensus Estimate for FIX's full-year earnings has moved 0.7% higher within the past quarter. This shows that analyst sentiment has improved and the company's earnings outlook is stronger.

According to our latest data, FIX has moved about 89.3% on a year-to-date basis. At the same time, Construction stocks have gained an average of 21.9%. This means that Comfort Systems is performing better than its sector in terms of year-to-date returns.

Another Construction stock, which has outperformed the sector so far this year, is Lennox International (LII). The stock has returned 36.9% year-to-date.

For Lennox International, the consensus EPS estimate for the current year has increased 3.5% over the past three months. The stock currently has a Zacks Rank #2 (Buy).

To break things down more, Comfort Systems belongs to the Building Products - Air Conditioner and Heating industry, a group that includes 5 individual companies and currently sits at #102 in the Zacks Industry Rank. Stocks in this group have gained about 33.8% so far this year, so FIX is performing better this group in terms of year-to-date returns. Lennox International is also part of the same industry.

Going forward, investors interested in Construction stocks should continue to pay close attention to Comfort Systems and Lennox International as they could maintain their solid performance.

Zacks Investment Research