Key Highlights

● Lennox cut full-year EPS guidance to $21-$21.50 from $23-$24.

● Third-quarter EPS of $6.84 missed the $7.36 consensus.

● Revenue of $1.57 billion came in just below estimates.

● Rising mortgage rates are seen as a demand headwind.

Lennox International shares tumbled after the heating and cooling maker missed third-quarter forecasts and slashed its full-year adjusted earnings outlook.

Lennox International (NYSE:LII) tumbled on Wednesday, October 28, one of the biggest decliners in the S&P 500, after the heating, ventilation and air-conditioning company reported a drop in profit and sharply cut its 2026 earnings guidance.

A Miss on Both Lines

Lennox now expects full-year adjusted earnings per share of $21 to $21.50, down from its previous range of $23 to $24, a meaningful reset to the company's full-year outlook. The third-quarter numbers also fell short: revenue came in at $1.57 billion, just below the $1.58 billion analysts expected, and earnings per share were $6.84, well short of the $7.36 consensus estimate.

A small revenue shortfall might have been forgiven on its own. The bigger blow was the earnings miss combined with the guidance cut, which signalled that the profit pressure was not a one-quarter event.

Why HVAC Demand Matters

Lennox makes furnaces, air conditioners, heat pumps and commercial rooftop units, selling to homeowners through dealers as well as to businesses. Demand is shaped by weather, housing activity, replacement cycles and the cost of financing big-ticket purchases.

That last factor has become a headwind. Long-dated Treasury yields climbed on Wednesday, with the 10-year pushing past a key psychological threshold, and mortgage rates have risen over the past month. There were echoes of that caution elsewhere in the market: Stifel downgraded Whirlpool (NYSE:WHR) to Sell, citing weak demand for big-ticket home goods.

A Divergence From AI-Linked Industrials

The broader market rose modestly after the Federal Reserve left its benchmark rate range unchanged in a 10-2 vote. The S&P 500 rose 21.38 points to close at 7,743.98, its third straight gain, while industrials were among eight S&P 500 sectors that finished higher.

Not every industrial struggled. Vertiv (NYSE:VRT), which supplies power and cooling equipment for data centers, soared after raising its guidance, and Generac (NYSE:GNRC) climbed after announcing a long-term data-center generator supply deal with Amazon. The divergence highlighted how investors are favoring businesses tied to AI infrastructure over those exposed to the housing and consumer cycle.

What to Watch

Investors will be watching for analyst estimate revisions after Lennox's guidance cut, and for any signs of whether residential HVAC demand stabilizes into 2027.

On the macro front, Thursday brings the advance reading on third-quarter GDP and September personal income, spending and PCE inflation at 8:30 a.m. ET. Caterpillar (NYSE:CAT), Mastercard (NYSE:MA) and Merck (NYSE:MRK) report before the open, and Amazon (NASDAQ:AMZN) reports after the close.