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Is Modine Manufacturing Company (NYSE:MOD) Potentially Undervalued?

Simply Wall St

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Modine Manufacturing Company (NYSE:MOD), which is in the auto components business, and is based in United States, received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $16.55 at one point, and dropping to the lows of $12.93. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Modine Manufacturing's current trading price of $13.28 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Modine Manufacturing’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Modine Manufacturing

Is Modine Manufacturing still cheap?

Good news, investors! Modine Manufacturing is still a bargain right now. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Modine Manufacturing’s ratio of 7.95x is below its peer average of 15.13x, which suggests the stock is undervalued compared to the Auto Components industry. Although, there may be another chance to buy again in the future. This is because Modine Manufacturing’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will Modine Manufacturing generate?

NYSE:MOD Past and Future Earnings, May 31st 2019

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Modine Manufacturing, it is expected to deliver a relatively unexciting earnings growth of 9.7%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since MOD is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on MOD for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MOD. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed investment decision.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Modine Manufacturing. You can find everything you need to know about Modine Manufacturing in the latest infographic research report. If you are no longer interested in Modine Manufacturing, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.