Modine Manufacturing Company (MOD) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of Modine (MOD)? Shares have been on the move with the stock up 22% over the past month. The stock hit a new 52-week high of $61.5 in the previous session. Modine has gained 204.4% since the start of the year compared to the 40.9% move for the Zacks Auto-Tires-Trucks sector and the 8.6% 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 November 1, 2023, Modine reported EPS of $0.89 versus consensus estimate of $0.64 while it beat the consensus revenue estimate by 1.25%.
For the current fiscal year, Modine is expected to post earnings of $3.04 per share on $2.45 billion in revenues. This represents a 55.9% change in EPS on a 6.68% change in revenues. For the next fiscal year, the company is expected to earn $3.52 per share on $2.6 billion in revenues. This represents a year-over-year change of 15.95% and 6.06%, 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 has run ahead of itself.
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 A. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 19.9X current fiscal year EPS estimates, which is a premium to the peer industry average of 13.9X. On a trailing cash flow basis, the stock currently trades at 20X versus its peer group's average of 7.6X. Additionally, the stock has a PEG ratio of 0.8. 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 look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Modine currently has a Zacks Rank of #2 (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 passes the test. Thus, it seems as though Modine shares could have a bit more room to run in the near term.
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 Dana Incorporated (DAN). DAN has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of F.
Earnings were strong last quarter. Dana Incorporated beat our consensus estimate by 200%, and for the current fiscal year, DAN is expected to post earnings of $1.36 per share on revenue of $10.52 billion.
Shares of Dana Incorporated have gained 14.9% over the past month, and currently trade at a forward P/E of 19.2X and a P/CF of 4.79X.
The Automotive - Original Equipment industry may rank in the bottom 58% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for MOD and DAN, even beyond their own solid fundamental situation.
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Modine Manufacturing Company (MOD) : Free Stock Analysis Report
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