Modine Stock Down 4% Post Q2 Earnings: Buy, Sell or Stay Invested?

Core Insights - Modine Manufacturing Company's shares fell over 4% following the release of its fiscal Q2 2026 results, despite a year-over-year revenue increase and an upward revision in revenue forecasts for fiscal 2026 [1][10] Financial Performance - Modine reported net revenues of $738.9 million for fiscal Q2, marking a 12% increase from the previous year, and adjusted earnings per share (EPS) of $1.06, which is a 9% year-over-year growth [3][7] - The Zacks Consensus Estimate indicates year-over-year growth of 11.3% in sales and 14.8% in earnings for fiscal 2026, with EPS estimates having increased by 14 cents over the past 90 days [14] Segment Performance - The Climate Solutions segment experienced a significant revenue increase of 24% year-over-year, driven by recent acquisitions and operational improvements [5][10] - Performance Technologies revenues declined by 4% year-over-year, with expectations of flat to a 7% decline for fiscal 2026 due to weak demand in certain markets [11] Growth Drivers - The company is expanding its capacity with new production lines in Grenada, MS, and Franklin, WI, and has secured a new facility in Grand Prairie, TX, expected to be operational early next fiscal year [7][8] - Modine aims for over 60% revenue growth in its data center business this year, targeting more than $2 billion in revenues by fiscal 2028 [9] Valuation - Modine's forward price-to-sales (P/S) ratio stands at 2.63, higher than the industry average of 1.96 and above its peers, with Aptiv at 0.90 and Dana at 0.38 [13] Market Position - The company competes with Aptiv PLC and Dana Incorporated, with both competitors reporting varying degrees of revenue and EPS growth in their recent results [4]