Modine Manufacturing Company (MOD) Hit a 52 Week High, Can the Run Continue?
Shares of Modine (MOD) have been strong performers lately, with the stock up 32.4% over the past month. The stock hit a new 52-week high of $47.48 in the previous session. Modine has gained 136% since the start of the year compared to the 39.1% move for the Zacks Auto-Tires-Trucks sector and the 6.3% return for the Zacks Automotive - Original Equipment industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 2, 2023, Modine reported EPS of $0.85 versus consensus estimate of $0.43 while it beat the consensus revenue estimate by 2.91%.
For the current fiscal year, Modine is expected to post earnings of $2.72 per share on $2.46 billion in revenues. This represents a 39.49% change in EPS on a 7.17% change in revenues. For the next fiscal year, the company is expected to earn $3.27 per share on $2.63 billion in revenues. This represents a year-over-year change of 19.98% and 6.83%, respectively.
Valuation Metrics
Modine may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Modine has a Value Score of B. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 17.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 15X. On a trailing cash flow basis, the stock currently trades at 15.5X versus its peer group's average of 8.2X. Additionally, the stock has a PEG ratio of 0.69. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Modine currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Modine fits the bill. Thus, it seems as though Modine shares could still be poised for more gains ahead.
How Does MOD Stack Up to the Competition?
Shares of MOD have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Autoliv, Inc. (ALV). ALV has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Autoliv, Inc. beat our consensus estimate by 33.10%, and for the current fiscal year, ALV is expected to post earnings of $6.65 per share on revenue of $10.21 billion.
Shares of Autoliv, Inc. have gained 6.1% over the past month, and currently trade at a forward P/E of 14.75X and a P/CF of 11.41X.
The Automotive - Original Equipment industry may rank in the bottom 63% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for MOD and ALV, even beyond their own solid fundamental situation.
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Modine Manufacturing Company (MOD) : Free Stock Analysis Report
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