Trane Technologies (NYSE:TT) & Lennox International (NYSE:LII) Critical Contrast

Trane Technologies (NYSE:TT) and Lennox International (NYSE:LII) are both large-cap construction companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Earnings and Valuation

This table compares Trane Technologies and Lennox International”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trane Technologies	$20.75 billion	4.56	$2.57 billion	$12.61	33.70
Lennox International	$5.34 billion	3.68	$806.90 million	$23.39	23.91

Trane Technologies has higher revenue and earnings than Lennox International. Lennox International is trading at a lower price-to-earnings ratio than Trane Technologies, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

83.0% of Trane Technologies shares are held by institutional investors. Comparatively, 67.1% of Lennox International shares are held by institutional investors. 0.1% of Trane Technologies shares are held by insiders. Comparatively, 9.7% of Lennox International shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Trane Technologies pays an annual dividend of $3.76 per share and has a dividend yield of 0.9%. Lennox International pays an annual dividend of $5.20 per share and has a dividend yield of 0.9%. Trane Technologies pays out 29.8% of its earnings in the form of a dividend. Lennox International pays out 22.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Trane Technologies has raised its dividend for 5 consecutive years and Lennox International has raised its dividend for 16 consecutive years. Lennox International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations for Trane Technologies and Lennox International, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trane Technologies	1	10	5	0	2.25
Lennox International	4	5	4	0	2.00

Trane Technologies currently has a consensus target price of $458.60, suggesting a potential upside of 7.93%. Lennox International has a consensus target price of $635.33, suggesting a potential upside of 13.62%. Given Lennox International’s higher probable upside, analysts clearly believe Lennox International is more favorable than Trane Technologies.

Profitability

This table compares Trane Technologies and Lennox International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trane Technologies	13.76%	36.61%	13.58%
Lennox International	15.41%	99.81%	24.12%

Risk & Volatility

Trane Technologies has a beta of 1.09, suggesting that its share price is 9% more volatile than the S&P 500. Comparatively, Lennox International has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.

Summary

Lennox International beats Trane Technologies on 10 of the 17 factors compared between the two stocks.

About Trane Technologies

Trane Technologies plc, together with its subsidiaries, designs, manufactures, sells, and services of solutions for heating, ventilation, air conditioning, custom, and custom and transport refrigeration in Ireland and internationally. It offers air conditioners, exchangers, and handlers; airside and terminal devices; air sourced heat pumps, auxiliary power units; chillers; coils and condensers; gensets; dehumidifiers; ductless; furnaces; home automation products; humidifiers; indoor air quality assessments and related products; large and light commercial unitary products; refrigerant reclamation products; thermostats/controls; transport heater products; variable refrigerant flow products; and water source heat pumps. The company also provides building management, telematic, control, energy efficiency and infrastructure program, geothermal, thermal energy, thermostats, rate chambers, package heating and cooling, temporary heating and cooling, and unitary systems; bus, rail, and multi-pipe heating, ventilation, and air conditioning systems; and container, diesel-powered, truck, industrial, rail, self-powered truck, trailer, and vehicle-powered truck refrigeration and air filtration systems, as well as aftermarket and OEM parts and supplies. In addition, it offers energy and facility management, installation and performance contracting, repair and maintenance, and rental services. It markets and sells its products under the Trane and Thermo King brands through sales offices, distributors, and dealers; and through sales and service companies with a supporting chain of distributors. The company was formerly known as Ingersoll-Rand Plc and changed its name to Trane Technologies plc in March 2020. Trane Technologies plc was founded in 1885 and is headquartered in Swords, Ireland.

About Lennox International

Lennox International Inc., together with 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 internationally. The Home Comfort Solutions segment provides furnaces, air conditioners, heat pumps, packaged heating and cooling systems, indoor air quality equipment, comfort control products, and replacement parts and supplies; residential heating, ventilation, cooling equipment, and air conditioning; and evaporator coils and unit heaters under Lennox, Dave Lennox Signature Collection, Armstrong Air, Ducane, AirEase, Concord, MagicPak, Advanced Distributor Products, Allied, Elite Series, Merit Series, Comfort Sync, Healthy Climate, iComfort, ComfortSense, and Lennox Stores name. The Building Climate Solutions segment offers unitary heating and air conditioning equipment, applied systems, controls, installation and service of commercial heating and cooling equipment, variable refrigerant flow commercial, curb, curb adapters, drop box diffusers, HVAC recycling, and salvage service. This segment also provides condensing units, unit coolers, fluid coolers, air cooled condensers, air handlers, and refrigeration rack systems for preserving food and other perishables; and compressor racks and industrial process chillers under the Lennox, Model L, CORE, Enlight, Xion, Energence, Prodigy, Strategos, Raider, Lennox VRF, Lennox National Account Services, Allied Commercial, Elite, AES Industries, Mechanical, and Reclaim, Heatcraft Worldwide and Chandler Refrigeration, Bohn, MAGNA, Larkin, FriguaBohn, IntelliGen, and Interlink brand name. In addition, the company provides small package units, rooftop units, chillers, air handlers, and fan coils. It sells its products and services through direct sales, distributors, and company-owned parts and supplies stores. The company was founded in 1895 and is headquartered in Richardson, Texas.