Head to Head Analysis: Lennox International (NYSE:LII) versus Quanex Building Products (NYSE:NX)

Lennox International (NYSE:LII) and Quanex Building Products (NYSE:NX) are both industrials companies, but which is the better business? We will compare the two companies based on the strength of their valuation, institutional ownership, earnings, profitability, risk, analyst recommendations and dividends.

Volatility and Risk

Lennox International has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500. Comparatively, Quanex Building Products has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Lennox International and Quanex Building Products, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lennox International	3	10	3	0	2.00
Quanex Building Products	0	2	1	0	2.33

Lennox International presently has a consensus target price of $444.85, indicating a potential upside of 25.67%. Quanex Building Products has a consensus target price of $28.00, indicating a potential upside of 44.14%. Given Quanex Building Products’ stronger consensus rating and higher possible upside, analysts clearly believe Quanex Building Products is more favorable than Lennox International.

Profitability

This table compares Lennox International and Quanex Building Products’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lennox International	13.77%	62.34%	17.67%
Quanex Building Products	2.43%	11.61%	4.30%

Valuation & Earnings

This table compares Lennox International and Quanex Building Products”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lennox International	$5.20 billion	2.33	$805.80 million	$21.55	16.43
Quanex Building Products	$1.84 billion	0.48	-$250.81 million	$0.99	19.62

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

Institutional & Insider Ownership

67.1% of Lennox International shares are owned by institutional investors. Comparatively, 97.5% of Quanex Building Products shares are owned by institutional investors. 9.8% of Lennox International shares are owned by insiders. Comparatively, 1.9% of Quanex Building Products shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Lennox International pays an annual dividend of $5.44 per share and has a dividend yield of 1.5%. Quanex Building Products pays an annual dividend of $0.32 per share and has a dividend yield of 1.6%. Lennox International pays out 25.2% of its earnings in the form of a dividend. Quanex Building Products pays out 32.3% 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.

Summary

Lennox International beats Quanex Building Products on 12 of the 17 factors compared between the two stocks.

About Lennox International

Lennox International designs, manufactures and markets heating, ventilation, air conditioning and refrigeration equipment. Its products include residential furnaces, air conditioners and heat pumps, as well as commercial climate-control systems and refrigeration equipment. The company serves residential, commercial and refrigeration markets, with operations primarily focused on North America and a presence in other international markets. Its businesses also provide related parts and services, including equipment installation and maintenance through company-owned and independent distribution channels.

About Quanex Building Products

Quanex Building Products Corporation is a manufacturer of components used in residential and commercial building products. Its offerings serve window, door, and cabinet makers, with products that include window and door components, screens, hardware, seals and weatherstripping, insulated-glass components, and cabinet doors and related parts. The company sells to manufacturers and other customers in the building-products supply chain. Its operations serve markets in North America and internationally, providing components used in both new construction and renovation projects.