DA Davidson maintains Buy on Modine stock, $135 target

On Wednesday, DA Davidson reiterated its Buy rating on Modine (NYSE:MOD) Manufacturing (NYSE: MOD) with a steady price target of $135.00. According to InvestingPro data, the stock currently trades at a P/E ratio of 32.1x and appears overvalued based on its Fair Value analysis. With a beta of 2.08, investors should note the stock’s relatively high volatility compared to the broader market. Modine’s fourth-quarter fiscal year 2025 results showcased sales, adjusted operating profit, EBITDA, and earnings per share that surpassed DA Davidson’s projections. The performance was notably driven by significant results in the Powertrain segment, which outperformed the firm’s conservative estimates, though this was partially offset by a slight underperformance in the Climate segment revenue against the firm’s expectations.

Modine’s initial fiscal year 2026 guidance for revenue and adjusted EBITDA fell in line with DA Davidson’s recently revised forecasts. The firm highlighted robust bookings in the Climate division’s Data Center sector, which balanced out the anticipated weaknesses in the legacy Commercial Vehicle, Off-Highway, and automotive businesses within the Powertrain segment.

The analyst at DA Davidson pointed out Modine’s solid balance sheet, emphasizing the company’s low net leverage ratio of 0.7 times. This financial stability is seen as a positive indicator of the company’s ability to manage debt and finance its operations efficiently. InvestingPro analysis supports this view, showing a healthy current ratio of 1.87 and an impressive Altman Z-Score of 6.95, indicating strong financial health. The company maintains a moderate debt-to-equity ratio of 0.55, while its liquid assets comfortably exceed short-term obligations.

The positive assessment from DA Davidson comes after Modine reported its financial outcomes, which demonstrated the company’s ability to exceed expectations in key financial metrics. The guidance provided by Modine for the upcoming fiscal year suggests a steady outlook, reflecting the company’s confidence in its business strategy and market position.

Investors and market watchers alike will monitor Modine’s stock as it continues to navigate the challenges and opportunities presented in its various business segments. The reaffirmed Buy rating and price target by DA Davidson reflects confidence in Modine’s potential for sustained performance and growth. The company has demonstrated strong profitability with a gross margin of 24.14% and return on equity of 20%. For deeper insights into Modine’s valuation and growth prospects, investors can access comprehensive analysis and 13 additional ProTips through InvestingPro’s detailed research report.

In other recent news, Modine Manufacturing Company reported record fourth-quarter results, surpassing earnings estimates. The company posted adjusted earnings per share of $1.12, exceeding analyst projections of $0.77. Revenue for the quarter rose by 7% year-over-year, reaching $647.2 million. Notably, the Climate Solutions segment experienced a significant sales increase of 28%, totaling $356.3 million, driven by strong demand for data center cooling and HVAC&R products. However, the Performance Technologies segment faced an 11% revenue decline, attributed to challenges in the automotive and other vehicle markets. CEO Neil D. Brinker highlighted the company’s third consecutive year of record revenue and adjusted EBITDA, attributing the success to their 80/20 transformation strategy. Looking ahead to fiscal 2026, Modine anticipates net sales growth of 2% to 10% and adjusted EBITDA ranging from $420 million to $450 million. The company’s positive earnings and outlook were well-received, as reflected by a slight increase in stock value.

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