Modine Manufacturing MOD has emerged as one of the big beneficiaries of the artificial intelligence (AI) infrastructure boom. As hyperscalers race to build AI-ready data centers, the need for advanced cooling solutions has become critical, and Modine is positioned to benefit from that.
The company recently capped off fiscal 2026 with a strong fourth-quarter performance, beating expectations on both revenue and earnings. Adjusted earnings per share jumped 53% year over year to $1.71, while revenues climbed 47% to $954.4 million. The standout performer once again was the data center cooling business, where quarterly revenues surged 158% to more than $400 million. For the full fiscal year, data center sales grew 73% and exceeded $1.1 billion, highlighting the strength of demand from AI infrastructure customers.
Modine Manufacturing Company Price, Consensus and EPS Surprise
Modine Manufacturing Company price-consensus-eps-surprise-chart | Modine Manufacturing Company Quote
Even more significant was Modine's announcement of a landmark agreement to supply more than $4 billion worth of cooling products between calendar 2027 and 2029. The deal significantly improves revenue visibility and validates Modine's aggressive capacity expansion plans to meet demand.
Investors have already been rewarding Modine for its growing exposure to AI infrastructure and its consistent execution in the fast-growing data center cooling market. The shares of MOD have more than doubled year to date, outperforming peers like Vertiv Holdings VRT and Trane Technologies TT. While Vertiv is a more established, scaled player in data center infrastructure and is already viewed as a direct beneficiary of the AI boom, Trane is a high-quality HVAC leader with strong margins, steady growth and proven execution.
YTD Price Performance Comparison
After such a remarkable run, the key question for investors is whether Modine stock is still worth buying at current levels.
Factors to Drive Modine
Modine's primary growth engine remains its rapidly expanding data center cooling business. Management expects data center revenues to grow 60-80% in fiscal 2027 and believes growth can remain between 50% and 70% beyond that. To support this demand, Modine is expanding its U.S. manufacturing footprint, with chiller production capacity expected to double by the end of fiscal 2027.
Modine is transforming its portfolio toward higher-growth and higher-margin markets. The acquisitions of AbsolutAire, L.B. White and Climate by Design strengthened its commercial HVAC offerings and added revenues of $119 million during fiscal 2026. At the same time, the planned separation of the Performance Technologies business would further sharpen the company's focus on data centers and commercial HVAC solutions.
Modine's fiscal 2027 outlook is also quite encouraging. The company expects revenue growth of 20% to 35% and adjusted EBITDA of $650-$680 million (up from $471 million recorded in fiscal 2026). Free cash flow generation is also expected to improve, supporting future investments and shareholder value creation.
Near-Term Supply Chain and Margin Pressure for MOD
Modine faces some near-term operational headwinds despite strong demand trends. Management noted shortages of certain critical components that are affecting production schedules and manufacturing efficiency, particularly in the Data Center and Commercial HVAC segments. As a result, margins are expected to decline year over year in the first quarter of fiscal 2027. While management expects these issues to be temporary, with margins improving from the second quarter onward as supply constraints ease and volumes increase, any prolonged disruptions could weigh on profitability and delay revenue realization.
Consensus EPS Estimates & Price Target for MOD
The Zacks Consensus Estimate for Modine’s fiscal 2027 and 2028 EPS has moved up 37 cents and $1.05 to $7.60 and $10.82, implying year-over-year growth of 51.4% and 42.3%, respectively.
The consensus price target is $316.63, implying a 13.5% upside from current levels.
Our Take: Modine is Worth Holding Onto
Modine is benefiting from powerful secular tailwinds in data center cooling, has secured a massive multi-year supply agreement and continues to post strong revenue, earnings and cash flow growth. Management's long-term growth outlook also suggests that the AI opportunity is still in its early stages.
That said, much of this optimism is already reflected in the stock price. After more than doubling year to date, valuation has become less attractive, as evidenced by its unfavorable Value Score of D.
As a result, existing shareholders should consider holding onto the stock to benefit from its strong position in the AI data center cooling market. However, investors looking to initiate a new position may wait for a more attractive entry point, particularly after such a sharp rally.
MOD stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Modine Manufacturing Company (MOD): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).