Lennox Cuts 2026 Earnings Forecast to $21.50 per Share After Third-Quarter Profit Decline

Key Facts

Lennox International cut its 2026 adjusted earnings-per-share forecast to a range of $21.00–$21.50, from its previous range of $23.00–$24.00, after reporting a 7% year-over-year decline in third-quarter adjusted earnings per share to $6.84. Diluted earnings per share under GAAP were $6.41, while net income reached $221 million, compared with $260 million in the year-earlier period. Adjusted earnings fell short of Zacks' pre-announcement estimate of $7.18 per share; the site had also expected revenue of $1.57 billion. In contrast, the company's actual revenue rose 10% to $1.6 billion, according to its statement. The shares closed at $372.05 on October 27, before the results were announced.

The difference between the two reported earnings figures underscores the distinction between the adjusted measure and earnings per share under accounting rules: the adjusted figure was $6.84, while the GAAP measure was $6.41. Diluted GAAP earnings per share had been $7.38 in the third quarter of 2025, when net income was $260 million. Net income therefore fell to $221 million in the current quarter, according to the company's comparison. Zacks' estimate of $7.18 was its pre-results estimate for the quarter ended in September 2026, not a broad analyst consensus. Zacks also estimated revenue at $1.57 billion, below the reported $1.6 billion.

At the operating level, segment profit, including unallocated corporate expenses, fell 2% to $323 million. Lennox said product cost inflation, including tariffs, along with lower factory absorption, had a negative impact of $45 million. In the Home Comfort Solutions segment, revenue rose 3% to $937 million, but segment profit fell 18% to $176 million. The segment's margin declined 490 basis points to 18.7%, reflecting competitive, inflationary and tariff pressures. Chief Executive Officer Alok Maskara said performance came “amid intensifying competitive pressures and the impact of continued inflation on our costs.”

By contrast, the Building Climate Solutions segment posted profit of $167 million, up $26 million, or 19%, year over year. Despite profit growth, the segment's margin fell 110 basis points to 26.2%. The divergence between the segments highlights that overall revenue growth did not prevent margin declines in parts of the business, particularly Home Comfort Solutions. Management attributed the pressure on results to increased competition and continued cost inflation, and Maskara said the company was working to pass on cost increases more effectively and accelerate productivity. A Reuters report published by Investing.com before the results said earnings-per-share estimates had fallen 2.2% over the previous sixty days and were unchanged in the prior week, amid competition and pricing pressure in the residential sector.

Third-quarter results marked a shift from the earnings surprise in the previous quarter. In the second quarter, adjusted earnings per share beat analyst consensus by 1.4%, at $7.72 versus consensus of $7.61. But revenue for that quarter, at $1.50 billion, came in 3.8% below estimates. The comparison leaves a mixed picture of the company's performance during the year: an adjusted earnings-per-share beat in the second quarter, followed by earnings below Zacks' estimate in the third quarter, alongside continued revenue growth in the latest period. An EL7 story published on July 29 reported that second-quarter earnings topped expectations despite declining year over year. In the third quarter, the annual forecast cut was the company's most prominent announced revision.

Alongside the earnings-per-share forecast cut, the company kept its 2026 revenue growth forecast at about 6%, including a 5% contribution from completed acquisitions. It also updated its free cash flow estimate to a range of $700–$750 million. The company said its upcoming priorities included addressing market share challenges, advancing productivity initiatives and mitigating the impact of tariffs, and launching new products in the economy segment. Lennox held its third-quarter earnings conference call on October 28, 2026, at 8:30 a.m. Central Time. The revised forecasts put the new annual figures alongside the company's revenue and cash flow plans, while its stated operating steps focus on market share, costs, productivity and new products.