Lennox International, Inc. (LII) vs Mastercard Incorporated (MA): Which Is the Better Buy in 2026?
As of 2026-08-03, LII is undervalued at $416, with a DCF intrinsic value of $557 and a margin of safety of 25%. MA is fairly valued at $573, with an intrinsic value of $558 and a margin of safety of -3%. Of the two, LII has the wider margin of safety.
Rewards
- ★Lennox International, Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Lennox International, Inc. scores 74/100 on the Economic Moat Score (Wide Moat), with reinvestment efficiency as the strongest competitive dimension.
- ★Free cash flow has grown at a 47.0% CAGR over the past 4 years, demonstrating strong earnings power growth.
- ★Mastercard Incorporated has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Gross margin of 100.0% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Mastercard Incorporated scores 99/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
Risks
- ⚠High leverage (1.52x net debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.
- ⚠Beneish M-Score of -1.37 flags financial patterns consistent with potential earnings manipulation — warrants further investigation.
- ⚠8 insider sales with no purchases over the past 12 months — a persistent pattern of insider selling.
- ⚠High leverage (2.33x net debt/equity) combined with thin interest coverage (-1.0x) poses financial risk.
- ⚠5 insider sales totaling $22.1M with no purchases in the past 3 months — insiders are reducing their exposure.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $416?
The market implies +7.9% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding +11.1%, reflecting heavy growth investment expected to generate future returns.
What growth rate is the market pricing in at $573?
The market implies +15.1% Owner Earnings growth, roughly in line with history — reasonably priced.
Standard FCF implies +13.4%, reflecting ongoing growth investment.
Economic Moat Score
Learn more →Wide moat driven primarily by reinvestment efficiency. Margin Stability is the area most vulnerable to competitive pressure.
Wide moat with strength across all dimensions. ROIC Consistency is the standout factor.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Mr. Market is panicking — potential buying opportunity if fundamentals are strong"
"Market is optimistic — be cautious and ensure you have a margin of safety"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: LII vs MA
Is Lennox International, Inc. or Mastercard Incorporated more undervalued in 2026?▼
Based on our discounted cash flow model, LII trades at a 25.3% margin of safety (intrinsic value $557 vs. price $416), compared to MA's -2.7% margin of safety (intrinsic $558 vs. $573).
Which stock has a wider economic moat, Lennox International, Inc. or Mastercard Incorporated?▼
MA scores 99/100 (Wide moat), while LII scores 74/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Which company has better free cash flow, Lennox International, Inc. or Mastercard Incorporated?▼
Lennox International, Inc. (LII) generates a 4.4% free cash flow yield, compared to Mastercard Incorporated's 3.4%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Lennox International, Inc. or Mastercard Incorporated?▼
MA earns 56.0% ROIC versus LII's 28.8%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Lennox International, Inc.'s or Mastercard Incorporated's?▼
MA's dividend earns a safety score of 94/100 (Very Safe), compared to LII's 94/100 (Very Safe). MA has raised its dividend for 3 consecutive years.
Does Lennox International, Inc. have accounting red flags?▼
LII's Beneish M-Score of -1.4 flags it as a likely earnings manipulator (above the -1.78 threshold). By contrast, MA scores -2.5, within the normal range. The Beneish model detects aggressive accounting through eight financial ratios.