Company Overview - Trane Technologies plc (NYSE:TT) specializes in manufacturing and servicing heating, ventilation, air conditioning, and refrigeration systems, along with providing energy management solutions, building automation, and aftermarket parts [2]. Recent Performance - Trane Technologies' stock experienced an 8% rally recently, attributed to a strong quarterly performance [1]. - The company has faced challenges, particularly a slowdown in the residential segment of its business, which is linked to the overall weakness in the housing market [1]. Industry Context - The heating, ventilation, and air conditioning (HVAC) sector, including companies like Trane and Carrier, has generally performed well, with a specific need for climate control equipment in data centers [1]. - Carrier has shown only moderate performance over the past couple of years compared to Trane [1].

Core Insights - Johnson Controls International plc (JCI) is a leading company in engineering, manufacturing, and retrofitting building products and systems, with a market capitalization of $71.6 billion [1] Performance Overview - JCI shares have outperformed the broader market over the past year, increasing by 53.4%, while the S&P 500 Index rose by 15% [2] - In 2026, JCI's stock has declined nearly 2.5%, underperforming the S&P 500's 1.9% increase [2] Earnings Report - On November 5, JCI's stock surged by 8.8% following a better-than-expected Q4 2025 earnings release, with total revenue growing 3.1% year over year to $6.4 billion, exceeding Wall Street estimates [4] - The adjusted EPS for the quarter was $1.26, beating estimates by 5% [4] Future Projections - Analysts expect JCI's EPS to rise by 21.5% year over year to $4.57 for the current year ending in September [5] - JCI has a solid earnings surprise history, surpassing consensus estimates in each of the last four quarters [5] Analyst Ratings - Among 20 analysts covering JCI, the consensus rating is a "Moderate Buy," consisting of 12 "Strong Buy" ratings and eight "Holds" [5] - The configuration has turned slightly bullish, with 12 "Strong Buy" ratings, up from 11 [6] - Morgan Stanley analyst Chris Snyder maintained an "Overweight" rating and raised the price target from $125 to $130, with a mean price target of $133.53 suggesting a 14.4% upside potential [6]

Core Insights - Fenimore Asset Management's Q4 2025 investor letter indicates a solid yet volatile stock market, influenced by AI enthusiasm, economic uncertainty, and monetary policy concerns [1] - The firm anticipates mixed market conditions in 2026, with many AI-related stocks appearing expensive while high-quality companies are trading at multi-year lows, presenting potential investment opportunities [1] Performance Summary - The S&P 500 Index rose by 2.66% in Q4 2025, with large-cap technology and communication services sectors leading the market [1] - Fenimore Small Cap Strategy returned -4.12%, underperforming the Russell 2000 Index, which returned 2.19% [1] - Fenimore Dividend Focus Strategy declined by -4.41% compared to the Russell Midcap Index's 0.16% return [1] - Fenimore Value Strategy saw a decline of -1.17% in Q4, also underperforming against the Russell Midcap Index [1] Company Focus: Trane Technologies plc - Trane Technologies plc (NYSE:TT) was highlighted as a key performance detractor in the Fenimore Dividend Focus Strategy [2] - As of January 15, 2026, Trane Technologies plc's stock closed at $387.27, with a one-month return of -0.66% and a 52-week loss of 0.49% [2] - The company has a market capitalization of $86.174 billion [2] - Despite challenges in the residential HVAC business due to industry changes, Trane Technologies plc's earnings and backlog remain strong, with AI data center cooling contributing positively [3]

Core Viewpoint - Lennox International Inc. (LII) is experiencing significant stock underperformance due to soft demand in the HVAC market and other operational challenges, despite having a strong brand and market position [2][5]. Company Overview - Lennox International Inc. is headquartered in Richardson, Texas, and specializes in products for heating, ventilation, air conditioning, and refrigeration markets, with a market cap of $17.4 billion [1]. - The company operates primarily in North America, focusing on direct sales, distributors, and company-owned parts and supplies stores, which reinforces its market position and brand recognition [2]. Stock Performance - LII's stock has declined 28.6% from its 52-week high of $689.44, reached on July 23, and has underperformed the S&P 500 Index, with a 10.5% decline over the past three months compared to the index's 2.9% gain [3][4]. - Over a six-month period, LII shares dipped 9.5% and fell 26.3% over the past 52 weeks, significantly underperforming the S&P 500's gains of 12.7% and 12% respectively [4]. Market Challenges - The company is facing challenges due to soft demand in both residential and commercial HVAC markets, characterized by declining industry shipments and inventory destocking among distributors and dealers [5]. - Regulatory changes, tariff exposure concerns, and a market shift towards repairs rather than replacements are additional factors negatively impacting LII [5]. Financial Results - In Q3, LII reported an EPS of $6.98, exceeding Wall Street expectations of $6.69, but its revenue of $1.4 billion fell short of forecasts of $1.5 billion [6]. - The company anticipates a full-year EPS in the range of $22.75 to $23.25 [6].

Core Insights - Carrier Global Corporation (CARR) is a leading provider of heating, ventilation, air conditioning, refrigeration, fire protection, security, and building automation technologies, with a market cap of $47.9 billion [1] Performance Overview - CARR shares have underperformed the broader market, declining 23.1% over the past year, while the S&P 500 Index has increased by 17.5% [2] - Year-to-date, CARR stock is down 16.7%, compared to a 15.6% rise in the S&P 500 [2] - Compared to the SPDR S&P Homebuilders ETF, which has declined about 12.2% over the past year, CARR's performance is notably weaker [3] Financial Results - In Q3, CARR reported revenue of $5.58 billion, exceeding analyst estimates of $5.56 billion [4] - The adjusted EPS of $0.67 surpassed analyst expectations by 17.7% [4] - For the current fiscal year ending in December, analysts project a 3.1% growth in EPS to $2.64 on a diluted basis [4] - CARR has consistently beaten consensus estimates in the last four quarters [4] Analyst Ratings - Among 24 analysts covering CARR, the consensus rating is a "Moderate Buy," consisting of 12 "Strong Buy" ratings, one "Moderate Buy," 10 "Holds," and one "Strong Sell" [5] - The consensus rating has become less bullish compared to the previous month, with 13 analysts previously suggesting a "Strong Buy" [6] - JPMorgan Chase & Co. maintained a "Neutral" rating on CARR and lowered the price target to $60, indicating a potential upside of 5.5% from current levels [6] - The mean price target of $74.65 suggests a 31.3% premium to CARR's current price, while the highest price target of $90 indicates an upside potential of 58.3% [6]