Lennox (LII) To Report Q2 Earnings: What's In The Cards?

Lennox International, Inc. (NYSE:LII) is scheduled to report second-quarter 2016 results on Jul 18, before the market opens. The Zacks Consensus Estimate for the quarter is pegged at $2.35.

The company reported better-than-expected results in three out of four trailing quarters, while lagging in one. It posted an average positive earnings surprise 0.89%. Last quarter, the company’s earnings of 62 cents per share surpassed the Zacks Consensus Estimate of 54 cents by 11.1%. Let's see how things are shaping up for Lennox International prior to this announcement.

Factors to Influence Q2 Results

Lennox International engages in designing, manufacturing and marketing of climate control solutions. Its technologically advanced products are primarily used in the heating, ventilation, air conditioning and refrigeration end-markets. A well-diversified product portfolio and a vast clientele might have positively influenced the company’s top-line growth in second-quarter 2016.

In addition, Lennox International anticipates an overall good performance in 2016. The company predicts its core sales to grow in 4−8% range. Earnings are predicted to be within $6.30−$6.80 per share range, above the previous forecast of $6.10−$6.60. Also, the company remains committed towards rewarding its shareholders through dividends and share buybacks.

However, the positive momentums of these tailwinds are slightly dimmed by the risks arising from certain industry-specific issues such as appreciating U.S. dollar and extensive business rivalry.

Earnings Whispers

Our proven model does not conclusively show that Lennox International will be able to pull a surprise this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for a likely earnings beat. That is not the case here, as you will see below.

Zacks ESP: Lennox International has an ESP of -0.43% for second-quarter 2016, with the Most Accurate Estimate of $2.34 lagging the Zacks Consensus Estimate of $2.35.

Zacks Rank: Lennox International’s Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies in the building products industry you may want to consider, as they have the right combination of elements to post an earnings beat this quarter, according to our model.

Louisiana-Pacific Corp. (NYSE:LPX) with an Earnings ESP of +4.0% and a Zacks Rank #1.

Lowe's Companies, Inc. (NYSE:LOW) with an Earnings ESP of +1.42% and a Zacks Rank #2.

Potlatch Corp. (NASDAQ:PCH) with an Earnings ESP of +42.86% and a Zacks Rank #2.