The HVAC industry is facing a painful reality check. After years of robust growth driven by pandemic-era construction booms and infrastructure spending, commercial heating and cooling manufacturers are watching revenues contract and margins compress. The question for investors: which companies are positioned to weather it and emerge stronger when demand returns.
We compared three HVAC manufacturers, AAON (NASDAQ:AAON | AAON Price Prediction), Carrier Global (NYSE:CARR), and Lennox International (NYSE:LII), to see who’s best positioned for the downturn and eventual recovery.
Three Players, Different Scales
AAON manufactures energy-efficient HVAC systems for commercial and industrial buildings. With a $6.09 billion market cap, they’re the smallest of the three but have historically commanded premium valuations for their focus on custom solutions and indoor air quality technology.
Carrier Global is the industry giant with a $45.27 billion market cap and $22.06 billion in trailing revenue. They serve residential, commercial, and industrial customers globally with a broad portfolio of HVAC and refrigeration products.
Lennox sits in the middle at $17.35 billion market cap and $5.35 billion in revenue. They focus on premium residential and commercial HVAC systems with an emphasis on energy efficiency and smart building technology.
The Numbers Tell a Troubling Story
All three companies are experiencing revenue pressure. Carrier’s quarterly revenue fell 6.8% year over year, while Lennox declined 4.8%. AAON posted 16.8% revenue growth in Q3 2025, but that topline strength masks a profitability issue.
The margin picture reveals who’s handling the downturn better. Lennox maintains a 21.3% operating margin and 15.7% profit margin, demonstrating pricing power and operational efficiency. Carrier’s margins are thinner at 9.55% operating and 18% profit. AAON’s margins have compressed dramatically to just 11.3% operating and 7.6% profit.
Most concerning for AAON: net income dropped 68.6% year over year in Q3 2025 despite the revenue growth. Earnings per share collapsed from $2.42 in 2023 to $2.01 in 2024, and the first nine months of 2025 produced just $0.96 per share. That puts AAON on track for approximately $1.28 in full-year earnings, a 47% decline from the 2023 peak.
The earnings volatility has been extreme. AAON beat estimates by 57% in Q1 2025, missed by 35% in Q2, then beat by 16% in Q3. This unpredictability suggests either poor forecasting or rapidly shifting business conditions.
Valuation Gaps Create Opportunity
Despite the earnings collapse, AAON trades at 60x trailing earnings and 36x forward earnings. Carrier sits at 33x earnings, while Lennox trades at 21x.
AAON’s premium valuation despite deteriorating fundamentals has created a 44% decline from its 52-week high of $137.27. The stock now trades around $75, closer to its 52-week low of $61.86. Analysts maintain a $115.25 target price, suggesting 54% upside if the company can stabilize operations.
Carrier and Lennox have also declined but remain above their respective lows, trading below their 200-day moving averages as the market reprices HVAC stocks downward.
Comparative Performance Analysis
Lennox maintains the strongest operational metrics with 21.3% operating margins, a strong return on assets of 19.3%, and the ability to grow earnings 4.5% despite a 4.8% revenue decline. The company trades at 21x earnings.
AAON has declined 44% from its 52-week high while insiders have been buying shares. The company trades at 60x trailing earnings despite compressed margins. If management can stabilize margins and return to the growth trajectory that produced 110% earnings growth from 2021 to 2023, analysts project potential recovery with a $115.25 target price.
Carrier maintains its market position with a $45.27 billion market cap despite compressed margins at 9.55% operating and minimal earnings growth. The company trades at 33x earnings.
The Bottom Line
The HVAC industry downturn is separating operators by quality. Lennox maintains superior operational execution with 21.3% operating margins. AAON has experienced significant valuation compression with insider buying at current levels. Investors should watch Q4 2025 earnings closely to see whether AAON’s margin pressure is temporary or structural.
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