What Does Lennox International Offer That Masco Does Not?
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Masco (MAS) and Lennox International (LII) both offer a bet on homeowners repairing and replacing what they already own. Masco covers the market through Delta faucets and Behr paint, while Lennox supplies HVAC systems. On October 28, the two split on price. Masco raised its 2026 earnings forecast. Lennox lowered its own forecast after giving up some pricing to defend its share of the residential market. Investors have sided with Masco, whose stock returned 40.4% over the past year as Lennox’s lost 26.2%. So is Lennox’s pricing winning customers back?
Lennox’s Pricing Has Not Yet Won Back Sales
Not yet, though the decline narrowed in the third quarter. Organic revenue in Lennox’s Home Comfort Solutions business fell 1% in the third quarter, after a 9% drop in the second. Even so, management now expects that business’s revenue to fall about 4% in 2026, where it had expected growth. Its guidance also assumes a mid-single-digit organic decline in Home Comfort Solutions sales for the fourth quarter.
Lennox lowered its 2026 forecast for adjusted earnings per share to $21.25 at the midpoint, down from $23.50. Management named lower realized prices and a higher tax rate as the main reasons.
Masco raised its 2026 adjusted earnings per share forecast to $4.70 at the midpoint, from $4.50. Management said the raise came entirely from operations, not tariffs. So Masco’s higher forecast comes from a business performing better than management expected, while Lennox’s lower forecast comes partly from the price it chose to give up. Lennox plans a price increase for 2027, which management expects to offset inflation.
Can Lennox Afford To Wait For Sales?
So far, it can. Lennox generated $395 million of operating cash flow in the third quarter, up $95 million from a year earlier, and bought back about $151 million of its shares. The company is also paying for an acquisition and for an entry-tier product line due in early 2027, and it lowered its 2026 free cash flow forecast. The acquisition was the $200 million purchase of the Comfort-Aire and Century brands, completed in the third quarter.
Management said pricing in both of its businesses did not keep up with tariffs and inflation, which squeezed Lennox’s margins.
Masco’s operating margin moved the other way. It widened to 17.2% from 15.8% a year earlier, though its costs are rising too. Management expects mid-single-digit inflation in input costs for 2026 and prices running modestly ahead of costs in plumbing. In paint, Masco has an arrangement with its large customer, The Home Depot, built around keeping price and cost neutral.
Lennox Is Cheaper And Grows Faster Than Masco
On the head-to-head figures, Lennox leads on valuation, growth, margin and debt. Investors pay 16.5 times trailing earnings for Lennox, against 18.4 times for Masco. Over the past twelve months, Lennox earned an operating margin of 19.5%, against Masco’s 18.0%. Revenue at Lennox grew 3.5% a year on average over the past three years, while Masco’s shrank 1.4% a year. Debt at Lennox equals 16.9% of its market value, compared with 20.5% for Masco.
Those figures look back. Lennox’s multiple rests on earnings already reported, not on the lower forecast, and Lennox expects acquisitions to supply most of its forecast revenue growth for 2026. Masco leads on direction. It raised its forecast while Lennox lowered three of its own, and Masco’s margin is widening while Lennox’s narrows.
Masco Offers Rising Profit Against Lennox’s Cheaper Stock
On what you pay and what each business earns now, Lennox comes out ahead. On where profit is heading, Masco takes the lead. Lennox has the cash to wait for its customers, but whether its pricing brings Home Comfort Solutions sales back is still open, with management expecting that business to shrink in 2026. Organic revenue in Home Comfort Solutions is the figure to watch when Lennox reports in January 2027.
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