Comparing Lennox International (NYSE:LII) and 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 contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Dividends

Lennox International pays an annual dividend of $5.44 per share and has a dividend yield of 1.6%. Quanex Building Products pays an annual dividend of $0.32 per share and has a dividend yield of 1.5%. 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. Lennox International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

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

Analyst Recommendations

This is a breakdown of current ratings for Lennox International and Quanex Building Products, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lennox International	3	11	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 30.17%. Quanex Building Products has a consensus target price of $28.00, indicating a potential upside of 35.03%. Given Quanex Building Products’ stronger consensus rating and higher probable upside, analysts plainly 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%

Insider & Institutional Ownership

67.1% of Lennox International shares are held by institutional investors. Comparatively, 97.5% of Quanex Building Products shares are held by institutional investors. 9.8% of Lennox International shares are held by company insiders. Comparatively, 1.9% of Quanex Building Products shares are held by company 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.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lennox International	$5.20 billion	2.25	$805.80 million	$21.55	15.86
Quanex Building Products	$1.84 billion	0.52	-$250.81 million	$0.99	20.95

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.

Summary

Lennox International beats Quanex Building Products on 13 of the 17 factors compared between the two stocks.

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.

About Quanex Building Products

Quanex Building Products Corporation, together with its subsidiaries, provides components for the fenestration industry in the United States, rest of Europe, Canada, Asia, the United Kingdom, and internationally. The company operates through three segments: North American Fenestration, European Fenestration, and North American Cabinet Components. It offers flexible insulating glass spacers, extruded vinyl profiles, window and door screens, and precision-formed metal and wood products, as well as cabinet doors and other components for original equipment manufacturers (OEMs) in the kitchen and bathroom cabinet industry. In addition, the company provides various non-fenestration components and products, including solar panel sealants, trim moldings, vinyl decking, fencing, water retention barriers, and conservatory roof components. It sells its products to OEMs in the building products industry through sales representatives, direct sales force, distributors, and independent sales agents. Quanex Building Products Corporation was founded in 1927 and is based in Houston, Texas.