Reflecting On HVAC and Water Systems Stocks' Q3 Earnings: Lennox (NYSE:LII)

Let’s dig into the relative performance of Lennox (NYSE:LII) and its peers as we unravel the now-completed Q3 hvac and water systems earnings season.

Many HVAC and water systems companies sell essential, non-discretionary infrastructure for buildings. Since the useful lives of these water heaters and vents are fairly standard, these companies have a portion of predictable replacement revenue. In the last decade, trends in energy efficiency and clean water are driving innovation that is leading to incremental demand. On the other hand, new installations for these companies are at the whim of residential and commercial construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates.

The 9 hvac and water systems stocks we track reported a strong Q3. As a group, revenues beat analysts’ consensus estimates by 3.6% while next quarter’s revenue guidance was 0.8% below.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Weakest Q3: Lennox (NYSE:LII)

Based in Texas and founded over a century ago, Lennox (NYSE:LII) is a climate control solutions company offering heating, ventilation, air conditioning, and refrigeration (HVACR) goods.

Lennox reported revenues of $1.43 billion, down 4.8% year on year. This print fell short of analysts’ expectations by 3.9%. Overall, it was a slower quarter for the company with a significant miss of analysts’ revenue estimates.

"As anticipated, 2025 is proving to be a transitional year, shaped by the impact of the refrigerant transition and difficult macroeconomic conditions. During these uncertain times, the Lennox team continues to respond with agility and discipline, delivering margin expansion in both segments," said CEO, Alok Maskara.

Lennox delivered the weakest performance against analyst estimates of the whole group. Unsurprisingly, the stock is down 8.6% since reporting and currently trades at $501.56.

Is now the time to buy Lennox? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Northwest Pipe (NASDAQ:NWPX)

Playing a large role in the Integrated Pipeline (IPL) project in Texas to deliver ~350 million gallons of water per day, Northwest Pipe (NASDAQ:NWPX) is a manufacturer of pipeline systems for water infrastructure.

Northwest Pipe reported revenues of $151.1 million, up 16% year on year, outperforming analysts’ expectations by 14.4%. The business had an incredible quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.

Northwest Pipe pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 13.2% since reporting. It currently trades at $63.02.

Is now the time to buy Northwest Pipe? Access our full analysis of the earnings results here, it’s free for active Edge members.

A. O. Smith (NYSE:AOS)

Credited with the invention of the glass-lined water heater, A.O. Smith (NYSE:AOS) manufactures water heating and treatment products for various industries.

A. O. Smith reported revenues of $942.5 million, up 4.4% year on year, in line with analysts’ expectations. It was a slower quarter as it posted full-year revenue guidance missing analysts’ expectations and full-year EPS guidance missing analysts’ expectations.

The stock is flat since the results and currently trades at $68.24.

Read our full analysis of A. O. Smith’s results here.

Zurn Elkay (NYSE:ZWS)

Claiming to have saved more than 30 billion gallons of water, Zurn Elkay (NYSE:ZWS) provides water management solutions to various industries.

Zurn Elkay reported revenues of $455.4 million, up 11.1% year on year. This number topped analysts’ expectations by 3%. It was a very strong quarter as it also recorded an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ revenue estimates.

The stock is up 1.7% since reporting and currently trades at $46.84.

Read our full, actionable report on Zurn Elkay here, it’s free for active Edge members.

Advanced Drainage (NYSE:WMS)

Originally started as a farm water drainage company, Advanced Drainage Systems (NYSE:WMS) provides clean water management solutions to communities across America.

Advanced Drainage reported revenues of $850.4 million, up 8.7% year on year. This print beat analysts’ expectations by 6.6%. Overall, it was an exceptional quarter as it also produced an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ adjusted operating income estimates.

Advanced Drainage had the weakest full-year guidance update among its peers. The stock is up 11% since reporting and currently trades at $149.53.

Read our full, actionable report on Advanced Drainage here, it’s free for active Edge members.

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