Aggressive Growth: Modine Manufacturing

Modine Manufacturing Co (MOD) is making the most of the September rally, thanks in large part to surging estimates.

Company Description

Modine Manufacturing Co. makes thermal management systems, offering heating and cooling solutions to the global automotive, industrial equipment and other end markets.

Back in the Black

Thanks in large part to the last quarterly report, analysts are expecting Modine Manufacturing to post a 29 cent profit this fiscal year. Last year the company lost 42 cents.

The full-year Zacks Consensus Estimate is up from a 7 cent loss to that 29 cent profit in the past 90 days. Next year’s forecasts are up to $1.07, from 84 cents, improving almost 3 fold.

Surprise Profit

Modine Manufacturing Co reported first-quarter results for the fiscal year on Jul 29. Sales grew 36% on a year-over-year basis and were up 6% since the previous quarter. The company credited the recovering agriculture and mining industries in the Western Hemisphere.

Continuing operations rebounded from a $5.6 million loss to a $3.1 million income. Earnings per share broke down to 7 cents, which was much better than the expected 5 cent loss.

Optimistic Outlook

In the same press release Modine Manufacturing raised its outlook, now customer production plans are more transparent. The company also mentioned longer-term trends that bode well for its future. The CEO Thomas Burke said, “When I look beyond 2013, we remain very excited about the growth drivers in the business, which include the need for reduced emissions, greater fuel efficiency and higher building energy efficiency standards.”

Tricky Valuations

Many investors may initially baulk at the lofty P/E and PEG ratios. Shares are trading at almost 44 times the forward estimates. But the current share price is just 12 times the level 2 years from now, which is better than most in its industry. Also, the price to sales of 0.46 is in line with Modine’s peers.

The Chart

Shares of MOD have made the most of this September rally and are heading into earnings season with plenty of momentum. Although, be ready for some volatility if you plan on holding for the long haul.

MODINE MANUFACT (MOD): Free Stock Analysis Report

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About Bill Wilton 56 Articles

Affiliation: Zacks Investment Research

Bill Wilton is the Growth Stock Strategist for He is also the Editor in charge of the market-beating Zacks Growth Trader service.

Visit: Zacks Investment Research

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