Modine to Report Q2 Earnings: Buy, Sell or Hold the Stock Now?

Modine Manufacturing Company MOD is slated to release second-quarter fiscal 2026 results on Oct. 28, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) and revenues is pegged at 97 cents and $690.5 million, respectively.

For the fiscal second quarter, the consensus estimate for Modine’s earnings has moved down 11 cents in the past 90 days. Its bottom line is expected to remain flat year over year. 

The Zacks Consensus Estimate for MOD's quarterly revenues implies year-over-year growth of 4.9%. 

For fiscal 2026, the Zacks Consensus estimate for Modine’s sales and EPS is pegged at $2.88 billion and $4.65, respectively. The company's earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.16%. This is depicted in the graph below:

Modine Manufacturing Company Price and EPS Surprise

Modine Manufacturing Company price-eps-surprise | Modine Manufacturing Company Quote

Earnings Whispers

Our proven model does not predict an earnings beat for Modine for the quarter to be reported, as it does not have the right combination of the two key ingredients. A positive Earnings ESP, combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat. This is not the case here.

Earnings ESP: MOD has an Earnings ESP of -5.86%. This is because the Most Accurate Estimate is pegged lower than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Things to Note

In the first quarter of fiscal 2026, Modine’s Climate Solutions segment posted an 11% increase in revenues and a 10% improvement in adjusted EBITDA. The growth was driven by higher sales of data center products as well as organic and inorganic growth in the HVAC Technologies. In fiscal 2026, the company expects data center sales to grow beyond 45% year over year. Modine expects fiscal 2026 Climate Solutions sales to grow 25-35% year over year and adjusted EBITDA in the range of $440-$470 million, representing growth of 12-20% year over year. Expected growth in fiscal 2026 sales and adjusted EBITDA is likely to have bolstered the company’s performance in the to-be-reported quarter.

However, Modine’s Performance Technologies revenues in the first quarter of fiscal 2026 were impacted by challenging end-market demand. Heavy-duty equipment sales declined 4% due to market weakness and lower Genset sales. On-highway sales fell 8% amid weaker demand and product exits. For fiscal 2026, the company expects Performance Technologies revenues to be down 2-12%. An anticipated decline in Performance Technologies for fiscal 2026 is likely to have hurt the company’s performance in the to-be-reported quarter.

Price Performance & Valuation

Shares of MOD have jumped more than 39% year to date, outperforming the industry’s growth. However, shares of MOD have underperformed its peers Dana Incorporated DAN and Aptiv PLC APTV. Shares of Dana and Atpiv have risen 71.9% and 43.2%, respectively.

 
From a valuation perspective, MOD appears overvalued compared to the industry. Going by its price/sales ratio, the company is trading at a forward sales multiple of 2.73, higher than the industry’s 2.01. Dana is trading at a forward sales multiple of 0.35, while Aptiv is trading at 0.91.

How to Play MOD Ahead of Q2 Results

Modine’s 80/20 principles focus on acquiring businesses and investing in technologies to accelerate strategic growth in select markets. This year, Modine acquired AbsolutAire, L.B. White and Climate by Design International. Acquisition of AbsolutAire and L.B. White supports Modine’s strategy to address mission-critical thermal management challenges while expanding into adjacent markets with strong long-term growth potential.

CDI acquisition adds significant expertise in desiccant-driven dehumidification and is recognized for its engineering excellence. Alongside earlier acquisitions of Napps Technology in 2023 and Scott Springfield in 2024, CDI further broadens Modine’s Commercial IAQ portfolio and opens access to new markets.

The company announced a $100 million investment over 12-18 months to expand U.S. manufacturing of Airedale by Modine data center cooling products. The plan includes a new Dallas facility, expansion in Grenada, MS and potential repurposing of sites in Franklin, WI and Jefferson City, MO. The investment will boost the company’s engineering, testing and product development. 

Moreover, the company has a return on equity (ROE) of 23.9% compared to the industry’s 7.2%. An ROE above 20% generally reflects very strong financial performance and efficient use of shareholder capital. 

However, this may not be an ideal entry point for new investors as weakness in Performance Technologies, lower heavy-duty sales and rising material costs weigh on the company’s near-term prospects.

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This article originally published on Zacks Investment Research (zacks.com).

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