Cooling is becoming a bigger part of the story as demand rises across buildings, industry and especially data centers, which puts companies like Modine Manufacturing MOD and Trane Technologies TT in focus.
Modine is carving out a niche in thermal management with growing exposure to high-demand areas, while Trane operates at a much larger scale with a mix of equipment and services. Both are benefiting from the same underlying trends, but their business models are quite different —making it worth a closer look at which one is better placed right now.
The Case for MOD
Modine’s data center business is gaining strong momentum. In fiscal third-quarter 2026, data center sales jumped 31% sequentially, with management expecting another strong step-up in the fourth quarter. Quarterly revenues from this segment alone are likely to cross the $400 million mark, which highlights how quickly this business is scaling.
What stands out even more is the visibility ahead. Modine built a solid order pipeline, supported by record intake across chillers and other cooling products. A growing share of these deals is tied to long-term supply agreements, stretching demand visibility to nearly five years. This kind of backlog provides a level of stability that’s not always common in industrial businesses.
Management is guiding for 50-70% annual growth in the data center business over the next two fiscal years. To support this, the company is actively expanding capacity, with most of the required infrastructure expected to be in place by fiscal 2027. Additional chiller production lines are also planned beyond that, ensuring Modine can keep up if demand remains strong. Based on its current plans, the company believes it can support up to roughly $3 billion in data center revenues over time, pointing to a much larger opportunity than what it is delivering today.
At the same time, Modine is reshaping its broader business to better align with these growth areas. The planned Reverse Morris Trust transaction with Gentherm will spin off its Performance Technologies unit. Once completed, Modine will be more focused, positioning itself as a pure-play climate solutions company with greater exposure to data centers and commercial HVAC.
This shift is also expected to lift profitability. As higher-margin data center revenues form a larger part of the mix and volumes scale up, operating leverage should improve. The company is targeting Climate Solutions margins in the range of 20-23% by fiscal 2027.
Overall, Modine’s investment case is increasingly centered on a fast-growing niche, backed by strong demand visibility, capacity expansion and a more focused business structure.
The Case for Trane
Trane’s story is closely tied to the steady expansion of the global HVAC market. Demand for efficient heating and cooling systems continues to rise as businesses and governments push for lower energy use and stricter sustainability standards. This trend is especially strong in developed markets like the United States and Europe, where regulations are accelerating upgrades to greener building infrastructure. Trane, with its focus on energy-efficient and decarbonization-driven solutions, is well-positioned to benefit from this shift.
A key strength lies in its Commercial HVAC business, particularly in the Americas. Strong bookings growth and a record backlog provide clear visibility into future revenues, offering a level of stability, even in a mixed macro environment.
The company’s product strategy also works in its favor. By focusing on customer-centric solutions and integrating sustainability into its offerings, Trane continues to attract clients looking to meet emissions targets while improving operational efficiency.
Trane is also strengthening its presence in fast-growing areas like data center cooling. The acquisition of Stellar Energy Americas enhances its ability to deliver pre-fabricated cooling systems, which are increasingly in demand. This not only expands its capabilities but also allows for faster and more scalable deployments — an important advantage as data center investments accelerate.
Financially, Trane remains on a solid footing. Strong cash flow generation and a healthy balance sheet provide the flexibility to invest in growth while continuing to reward shareholders. In 2025, the company returned significant capital through share buybacks ($1.5 billion) and dividends ($837.3 million).
Overall, Trane offers a stable, scale-driven investment case, supported by consistent demand, strong backlog visibility and a growing focus on sustainability-led solutions.
Price Performance & Valuation Check: MOD vs. TT
Shares of Modine have jumped more than 230% over the past year, while Trane stock has risen 42%.
From a valuation perspective, Modine currently looks more attractive on a price-to-sales basis.
Our Take
Both Modine and Trane are fundamentally solid, but the edge tilts toward Modine. Trane offers stability, scale and consistent execution, making it a reliable compounder. However, Modine stands out with a far stronger growth profile, driven by its rapidly scaling data center business, improving margins and a strategic shift toward higher-value climate solutions. This is also reflected in superior EPS growth expectations. Despite a sharper run-up, its valuation looks more attractive than Trane.
While both stocks carry a Zacks Rank #3 (Hold), our pick is Modine for stronger momentum and a sharper growth narrative.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).