Head to Head Review: Lennox International (NYSE:LII) and Trane Technologies (NYSE:TT)

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

Valuation & Earnings

This table compares Lennox International and Trane Technologies”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lennox International	$5.34 billion	3.67	$806.90 million	$23.39	23.84
Trane Technologies	$19.84 billion	4.66	$2.57 billion	$12.61	32.94

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.

Analyst Recommendations

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

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

Lennox International presently has a consensus target price of $635.33, indicating a potential upside of 13.95%. Trane Technologies has a consensus target price of $458.60, indicating a potential upside of 10.41%. Given Lennox International’s higher possible upside, research analysts clearly believe Lennox International is more favorable than Trane Technologies.

Dividends

Lennox International pays an annual dividend of $5.20 per share and has a dividend yield of 0.9%. Trane Technologies pays an annual dividend of $3.76 per share and has a dividend yield of 0.9%. Lennox International pays out 22.2% of its earnings in the form of a dividend. Trane Technologies pays out 29.8% 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. Lennox International has increased its dividend for 16 consecutive years and Trane Technologies has increased its dividend for 5 consecutive years. Lennox International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Lennox International has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500. Comparatively, Trane Technologies has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500.

Profitability

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

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

Insider & Institutional Ownership

67.1% of Lennox International shares are held by institutional investors. Comparatively, 83.0% of Trane Technologies shares are held by institutional investors. 10.4% of Lennox International shares are held by company insiders. Comparatively, 0.1% of Trane Technologies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

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

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.

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.