Lennox International reported first-quarter earnings revealing increased sales but lower net income and EPS compared to the previous year, while projecting a modest revenue growth of 2% for the full year of 2025. The company's share price declined by 7.14% over the last week amid broader market gains. This decline may have been influenced by market reactions to the earnings report, as investors are assessing company performance against rising market expectations. Additionally, Lennox's share buyback activity and plans for acquisitions could add weight to the company's efforts in capital management, but did not prevent the price drop.

We've identified 1 warning sign with Lennox International and understanding the impact should be part of your investment process.

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The recent performance of Lennox International, with a 7.14% decline in share price post-earnings, brings attention to several factors influencing the company's outlook. Over the past five years, Lennox's total return was 183.93%, reflecting significant growth beyond short-term volatility. This longer-term context highlights substantial value appreciation for shareholders. Yet, against the most recent annual benchmark, Lennox outperformed the US Building industry and broader market, which both showed lesser returns.

The company's proactive measures, such as transitioning to higher-margin R-454B products and expanding through a joint venture with Samsung, hold potential to bolster future revenue and earnings. However, challenges in macroeconomic conditions and inefficiencies pose risks for these growth initiatives. Analysts project Lennox's revenue will grow by 4.8% annually, with forecasted earnings reaching US$986.7 million by April 2028, underscoring moderate growth expectations.

Considering the recent share price depreciation, now at US$558.93, compared to the consensus analyst price target of US$582.48, there is a 4% upside potential. This suggests analysts see the stock as broadly aligned with its underlying value, though investor perceptions of market conditions and company developments could shift this outlook. Engaging with these analyses, investors may wish to consider these variables when evaluating their positions on Lennox International.

Take a closer look at Lennox International's potential here in our financial health report.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NYSE:LII.

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