MODINE MANUFACTURING CO (MOD): what the price assumes

In the published model solve dated 2026-Q2, anchored at $184.11, MODINE MANUFACTURING CO (MOD) is priced for today's economics sustained for ~13.1 years. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/MOD

Headline

FieldValue
TickerMOD
CompanyMODINE MANUFACTURING CO
Current price$184.11/sh
CompositionData Centers 35% / Heat Transfer Solutions 18% / HVAC Technologies 11% / Heavy-Duty Equipment 13% / On-Highway Applications 23%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)10.1%
Operating margin today10.8%
Margin compression (value-band)-0.7pp
Must persist for13.1y
Multiple paid30x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 12.9% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.2 years.

Reconcile: at the x-ray's 9.3% required return this reads ~6 years; the models below use their own rates.

How unusual the bet is: high

ReferenceValue
vs own history+0.20σ
cohort percentile (of 212 peers)84
sustained it ~10 years at this level14%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset7.07x5expensive
Earnings8.35x4expensive
Relative1.80x3expensive
Growth0.98x3justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=15)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$113.741.62xyesFCF base $0.2B, growth 23% (input: historical growth), terminal g 4.0%, WACC 9.2%, 7yr projection
DCF Exit MultipleGrowth$187.220.98xyesExit EV/EBITDA: 21.2x / 23.2x / 25.2x (bear / base = today's held flat / bull), 7yr
Relative ValuationRelative$115.901.59xyesP/E 38x (blended: static sector reference 20x + trailing (TTM) 80x), scenarios: 30.6x / 38.0x / 45.4x (bear / base = reference held flat / bull), EV/EBITDA 16.06x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$24.887.40xyesBV/sh $22.62, ROE (TTM) 10.2%, ke 9.3%
Two-Stage Excess ReturnAsset$26.057.07xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$204.020.90xyesRev $3.2B, growth 23% (input: historical growth; tapered), Terminal P/S: 2.5x / 3.1x / 3.6x (bear / base = today's held flat / bull, cap 12x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$32.325.70xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.23B × (1−23%) / WACC 9.2% → EPV (no growth)
Residual IncomeAsset$26.277.01xyesBV $22.62 + 5yr PV of (ROE (TTM) 10.2% − Kₑ 9.3%) × BV; BV grows 6.6%/yr
Graham NumberAsset$33.925.43xyes√(22.5 × EPS $2.26 × BVPS $22.62) — Graham's conservative floor
EV/EBITDA RelativeRelative$102.451.80xyesEBITDA $0.42B × sector EV/EBITDA 13.0x
FCF YieldEarnings$20.119.16xyesFCF $105.4M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$15.5811.82xyesSBC-adj FCF $0.08B (FCF $0.11B − SBC $0.02B) capitalized at Kₑ
Ben Graham FormulaEarnings$1.8997.41xyesEPS $2.26 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset$15.5011.88xyesBV $22.62 × (ROIC 6.3% / WACC 9.2%)
P/Sales SectorRelative$90.372.04xyesRevenue $3.18B × sector P/S 1.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$24.437.54xyesEPS $2.26 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$355.3m
Net debt / NOPAT (after-tax)1.35x
Net debt / operating income (pre-tax)1.04x
Interest coverage10.8x
Share count CAGR (dilution)0.2%
Burning cashno

Bullet Takeaways

At $297.78 the market pays roughly 54x company-wide operating income, a price only the growth-DCF in the model can reach. Asset, earnings-power, and peer-multiple frames all land far below, so the entire case rests on durable compounding the static methods cannot see.

The surprise in the numbers is the segment mix. Data Centers now carry about 35% of the priced-in weight and grew sales 73% to cross $1.1 billion in fiscal 2026, a line that barely existed a few years ago. A heat-exchanger company is being repriced as a cooling-infrastructure supplier.

The balance sheet supports the bet without straining it. Net debt sits near $355 million against $342 million of trailing operating income, interest coverage runs about 10.8x, and the share count has been flat. The risk is not solvency, it is paying twenty years of sustained compounding up front.

Bull Case

The number that does not fit the old story is segment weight. Modine still reads on paper like a hundred-year-old maker of radiators and heat exchangers, yet Data Centers now account for about 35% of what the price is paying for, more than any other line. In fiscal 2026 that business grew sales 73% to cross $1.1 billion, inside a Climate Solutions segment that itself grew 43%. The company's own filing describes the shift in plain terms, noting sales rose "primarily driven by higher sales of data center cooling and HVAC&R products" and that it is "seeing the benefits of our strategic growth initiatives, particularly within our Data Center Cooling business" (FY2025 10-K, accession 0001558370-25-008058). A thermal-management supplier has walked into one of the few end-markets where capacity is the binding constraint.

The demand signal is now contractual, not just cyclical. Modine signed a long-term capacity-locking agreement to supply more than $4 billion of data center cooling products across calendar 2027 through 2029, and guides to 50-70% annual revenue growth in Data Centers through fiscal 2028. The product set is specific and defensible: the 10-K describes "IT cooling solutions, including precision air conditioning units for data center applications" and free-cooling technology aimed at lower water and energy consumption (accession 0001558370-25-008058). When a hyperscaler picks a cooling vendor it is designing that vendor into the building, which is exactly the kind of switching cost the static valuation models have no field for.

The rest of the business pays for the option. Full-year revenue grew 23% and adjusted EBITDA reached $471 million, up 20%, with consolidated operating income carried by the older Heat Transfer and on-highway lines while the data-center line scales. The filing frames the strategy as "leveraging our portfolio" of higher-value technologies and proprietary capability to "sustain market leadership" (accession 0001558370-25-008058). Interest coverage near 10.8x and a flat share count mean the growth is being funded from operations rather than dilution, so a shareholder who believes the data-center order book is real is not also underwriting a financing risk.

Bear Case

The structural truth a holder would rather not face is that the price already assumes the data-center story works for a very long time. At $297.78 (June 27, 2026) the market pays about 54x company-wide operating income, which inverts into operating growth held near its self-funding ceiling for roughly twenty years. That is the bet. Only the growth-DCF reaches today's quote, and it gets there by extrapolating a 23% growth rate forward. Strip the extrapolation and the support disappears.

The order book that powers the bull case is also a concentration risk. A $4 billion multi-year commitment is large relative to a company doing roughly $3.2 billion of total revenue, which means a handful of hyperscale customers now sit close to the center of the thesis. Hyperscaler capital spending moves in waves, and the same buyers can in-source cooling, dual-source it, or push price. Modine itself flags margin timing risk, noting in its 10-K the "inherent lag in timing" of recovering cost increases through its quotation and contract-adjustment process (accession 0001558370-25-008058). Rapid revenue growth into a few large accounts is not the same as durable pricing power.

Finally, the implied math is demanding even before any stumble. The price requires the operating margin to climb from about 10.8% toward roughly 16.7% and to stay there while the company scales fivefold in its fastest line. History sets the odds: only about 14% of comparable fast-growers have sustained this kind of pace for a decade. A holder is not wrong that the business is improving. The bear point is narrower and harder to dismiss: at this price the improvement has to be both larger and longer than almost any precedent, and the static valuation methods that price what has already happened are unanimous that it is not there yet.

Valuation

The valuation tells a clean four-family story. Twenty-plus methods were run; the asset family (book-value and excess-return approaches) centers near $25, the earnings-power family (Earnings Power Value, FCF yield, earnings yield) near $20 to $32, and the peer-multiple family (sector P/E, EV/EBITDA, P/Sales) near $90 to $141. Against a price of $297.78, every one of those families implies the stock is expensive, with the earnings frames roughly 13x and the asset frames roughly 11x above where the price sits.

Only the growth family reaches the price, and only on its most forward members. The DCF Perpetual Growth model lands at $113 on a 23% growth input, while the DCF Exit Multiple ($288) and Discounted Future Market Cap ($330) get to current levels by holding today's elevated EV/EBITDA and P/S multiples roughly flat into the future. In other words, the price is justified only if you assume the market keeps paying premium multiples and the top line compounds for years.

Inverting the price rather than projecting one says the same thing more precisely. At today's quote the implied bet is company-wide operating income compounding near its self-funding ceiling for about twenty years, with margins expanding from 10.8% toward 16.7%, computed at a 13.4% cost of capital where each additional point of growth moves the implied horizon about 2.9 years. The reverse-DCF reasonable-growth band lands at roughly $37 to $64, base near $48. The gap between that band and the price is the durability premium the market is assigning to the data-center franchise.

Catalysts

The fiscal 2026 results, reported in late May 2026, are the most important recent print: full-year revenue up 23%, adjusted EBITDA of $471 million up 20%, and fourth-quarter net sales up 47% to $954.4 million on data-center demand. Climate Solutions revenue grew 43% and the Data Center line grew 73% past $1.1 billion (Modine investor relations, May 2026). The forward set is unusually concrete for an industrial: management guides to 50-70% annual Data Center revenue growth through fiscal 2028 and has signed a capacity-locking agreement to supply more than $4 billion of cooling products across calendar 2027 through 2029, so the near-term watch items are order-book conversion and whether margin keeps pace with mix.

Sentiment is firmly bullish, which raises the bar for surprises. The consensus rating is Strong Buy across the covering analysts, with an average twelve-month target near $341 (range roughly $325 to $370); DA Davidson reiterated a Buy and a $330 target on June 22, 2026 (Benzinga; MarketBeat). With no recent downgrades, the risk into the next print is asymmetric: the bar is high, so the swing factor is execution on the data-center ramp and any sign that hyperscaler ordering cools or that cost-recovery lag pressures margin.

Sources: Modine Q4 FY2026 results (investors.modine.com, May 2026); Barchart data-center target coverage; DA Davidson / Benzinga and MarketBeat analyst targets (June 2026).

Peer Cohorts (Per Segment, With Filing Citations)

Climate Solutions (reported)

Performance Technologies (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive MOD report on boothcheck