Lennox International (NYSE:LII) & Forbo (OTCMKTS:FBOHY) Critical Review

Forbo (OTCMKTS:FBOHY) and Lennox International (NYSE:LII) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, earnings, profitability, valuation and dividends.

Earnings & Valuation

This table compares Forbo and Lennox International’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Forbo	N/A	N/A	N/A	$1.20	32.38
Lennox International	$5.02 billion	4.12	$590.10 million	$17.26	33.67

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

Institutional and Insider Ownership

67.1% of Lennox International shares are held by institutional investors. 10.4% of Lennox International shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Forbo	N/A	N/A	N/A
Lennox International	12.85%	198.36%	23.19%

Analyst Recommendations

This is a summary of current ratings and target prices for Forbo and Lennox International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Forbo	0	0	0	0	N/A
Lennox International	1	6	6	0	2.38

Lennox International has a consensus target price of $543.62, suggesting a potential downside of 6.45%. Given Lennox International’s higher probable upside, analysts plainly believe Lennox International is more favorable than Forbo.

Dividends

Forbo pays an annual dividend of $0.25 per share and has a dividend yield of 0.7%. Lennox International pays an annual dividend of $4.60 per share and has a dividend yield of 0.8%. Forbo pays out 21.1% of its earnings in the form of a dividend. Lennox International pays out 26.7% 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 raised its dividend for 15 consecutive years. Lennox International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Lennox International beats Forbo on 12 of the 13 factors compared between the two stocks.

About Forbo

Forbo Holding AG produces and sells floor coverings, building and construction adhesives, and power transmission and conveyor belt solutions in Europe, the Americas, Asia Pacific, and Africa. The company operates through two divisions, Flooring Systems and Movement Systems. The Flooring Systems division develops, produces, and sells linoleum, vinyl floorings, entrance flooring systems, carpet tiles, needle felt floor coverings, Flotex, the washable textile floorings, and building and construction adhesives, as well as various accessory products for laying, processing, cleaning, and care of flooring. This division also provides ready-made adhesives for floor covering installations, parquet flooring, and ceramic tiles, as well as leveling compounds for the construction industry and liquid floors under the trade name of Eurocol. Its products are used in public buildings, department stores, hospitals and other healthcare facilities, schools, libraries, commercial and office spaces, leisure centers, shops, hotels, restaurants, and cafeterias, as well as for applications in the residential market. The Movement Systems division offers conveyor and processing belts, plastic modular belts, power transmission belts, and timing and flat belts under the Siegling brand name. Its products are used in various applications in industry, trade, and the service sector, including conveyor and processing belts in the food industry; treadmill belts in fitness studios; and flat belts in mail distribution centers. Forbo Holding AG was founded in 1928 and is headquartered in Baar, Switzerland.

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.