Analyzing AAON (AAON) and Lennox International (NYSE:LII)

AAON (NASDAQ: AAON) and Lennox International (NYSE:LII) are both construction companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, institutional ownership, profitabiliy, dividends and earnings.

Valuation and Earnings

This table compares AAON and Lennox International’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AAON $384.63 million 4.85 $91.19 million $0.96 36.95
Lennox International $3.72 billion 2.09 $530.80 million $6.77 26.94

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for AAON and Lennox International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AAON 0 0 1 0 3.00
Lennox International 1 6 2 0 2.11

AAON presently has a consensus price target of $30.00, suggesting a potential downside of 15.43%. Lennox International has a consensus price target of $176.17, suggesting a potential downside of 3.42%. Given Lennox International’s higher possible upside, analysts plainly believe Lennox International is more favorable than AAON.

Profitability

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

Net Margins Return on Equity Return on Assets
AAON 13.43% 25.28% 19.93%
Lennox International 7.97% 1,371.49% 16.58%

Insider & Institutional Ownership

66.1% of AAON shares are held by institutional investors. Comparatively, 68.6% of Lennox International shares are held by institutional investors. 22.3% of AAON shares are held by insiders. Comparatively, 3.6% of Lennox International shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

AAON has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500. Comparatively, Lennox International has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.

Dividends

AAON pays an annual dividend of $0.26 per share and has a dividend yield of 0.7%. Lennox International pays an annual dividend of $2.04 per share and has a dividend yield of 1.1%. AAON pays out 27.1% of its earnings in the form of a dividend. Lennox International pays out 30.1% 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. AAON has increased its dividend for 5 consecutive years.

Summary

Lennox International beats AAON on 9 of the 17 factors compared between the two stocks.

AAON Company Profile

AAON, Inc. is engaged in the engineering, manufacturing, marketing and sale of air conditioning and heating equipment consisting of standard, semi-custom and custom rooftop units, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps and coils. Its products serve the commercial and industrial new construction and replacement markets. Its rooftop and condensing unit markets consist of units installed on commercial or industrial structures of less than 10 stories in height. Its air handling units, self-contained units, geothermal/water-source heat pumps, chillers, packaged outdoor mechanical rooms and coils are applicable to all sizes of commercial and industrial buildings. The replacement market consists of products installed to replace existing units/components that are worn or damaged.

Lennox International Company Profile

Lennox International Inc. is a provider of climate control solutions. The Company designs, manufactures and markets a range of products for the heating, ventilation, air conditioning and refrigeration (HVACR) markets. It operates through three segments: Residential Heating & Cooling; Commercial Heating & Cooling, and Refrigeration. It manufactures and markets a range of furnaces, air conditioners, heat pumps, packaged heating and cooling systems, equipment and accessories to manage indoor air quality, comfort control products, replacement parts and supplies and related products for both the residential replacement and new construction markets in North America. It manufactures and sells unitary heating and cooling equipment used in light commercial applications, such as low-rise office buildings, restaurants, retail centers, churches and schools. It manufactures and markets equipment for the global commercial refrigeration markets under the Heatcraft Worldwide Refrigeration name.

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