Modine Manufacturing Company MOD delivered margin improvement in fiscal 2026 by maintaining tight control over expenses despite lower revenues and several cost headwinds. The company’s adjusted EBITDA margin for fiscal 2026 increased 30 basis points year over year to 13.8%, reflecting its focus on cost discipline and its 80/20 operational strategy.
Modine expects further profitability gains in fiscal 2027. The company projects adjusted EBITDA in the range of $650-$680 million, representing more than 40% growth from the prior year. This outlook implies an additional 100 to 200 basis points of margin expansion, supported by commodity-related pricing adjustments, tariff recoveries and margin improvements across all three business segments.
For the first quarter of fiscal 2027, Modine’s margins in its Commercial HVAC and Data Center businesses are expected to remain below year-ago levels due to difficult comparisons and ongoing supply chain constraints affecting data center operations.
Modine anticipates a turnaround beginning in the second quarter, with all three business segments expected to post year-over-year margin improvement. The company expects favorable margin performance to continue through the third and fourth quarters, supported by stronger revenue growth and the easing of data center supply chain shortages, which should enable higher production volumes and improved operating leverage. MOD carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
How Do Modine’s Peers Expect Margins to Evolve?
Lennox International Inc. LII continues to drive growth through customer-focused initiatives, disciplined capital allocation and successful acquisition integration, supporting its resilient margin profile. In the first quarter, Lennox attributed its margin decline entirely to factory underabsorption. As underabsorption issues ease through the second quarter and the latter half of the year, Lennox expects margins to return to more normal levels.
Johnson Controls International plc JCI reported approximately 100 basis points of year-over-year margin expansion in its Americas segment during the second quarter of fiscal 2026, largely driven by revenue growth and operating leverage. However, Johnson Controls' productivity was temporarily affected by the ramp-up of manufacturing capacity in North America. While Johnson Controls expects some near-term inefficiencies as new employees are trained and production scales up, the company believes strong backlog levels will support continued margin improvement through the remainder of the year.
MOD’s Price Performance, Valuation & Estimates
MOD has outperformed the Zacks Automotive-Original Equipment industry in the last six months. Modine’s shares have rallied 124.3% compared to the industry’s growth of 3.3%.
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From a valuation perspective, MOD appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 3.61, higher than the industry’s 2.26.
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The Zacks Consensus Estimate for MOD’s fiscal 2026 and 2027 EPS has moved up 50 cents and $1.10, respectively, in the past 30 days.
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