Key Takeaways:
- Modine Manufacturing is executing an aggressive data center capacity expansion through strategic acquisitions and facility build-outs, targeting over $2 billion in data center revenue by fiscal 2028 across cooling and thermal management solutions.
- MOD could reasonably reach $204/share by March 2028, based on our valuation assumptions.
- This implies a total return of 29% from today’s price of $159/share, with an annualized return of 11% over the next 2.3 years.
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Modine Manufacturing (MOD) is establishing new benchmarks in the data center thermal management segment through aggressive capacity expansion, addressing liquid cooling, air cooling, and modular data center solutions across hyperscaler, neocloud, and colocation markets.
Modine serves data center and HVAC customers globally through its Climate Solutions portfolio, which includes chiller systems, air handlers, cooling distribution units (CDUs), and modular data center products, all delivered with premium customization and rapid deployment capabilities.
Core offerings include data center cooling systems (both air and liquid cooling), HVAC technologies for commercial and industrial applications, and heat transfer solutions.
The company is transitioning from a low-volume, high-mix operation to a high-volume producer while maintaining its premium, highly customizable positioning.
The thermal management leader delivered second-quarter fiscal 2026 revenue growth of 12%, with Climate Solutions posting 24% revenue growth.
Data center sales specifically jumped 42% year-over-year, driven by $67 million in incremental revenue as the company ramps production across multiple new facilities.
The company raised its fiscal 2026 data center revenue growth outlook to over 60% (from prior expectations) and is aggressively expanding manufacturing capacity across five U.S. locations plus international facilities in Chennai, India, and the U.K.
MOD stock has delivered returns of over 1,600% to shareholders over the last decade. Here’s why Modine stock could provide strong returns through 2028 as it capitalizes on explosive data center cooling demand while scaling production capacity from current levels toward $2 billion in annual data center revenue.
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What the Model Says for Modine Stock
We analyzed the upside potential for Modine stock using valuation assumptions based on its data center capacity ramp and market expansion opportunities across cooling technology deployment and hyperscaler customer growth strategies.
Analysts see an opportunity ahead for Modine stock, given its proven thermal management expertise, aggressive capacity-expansion strategy, and systematic approach to building competitive advantages while navigating near-term margin pressure from facility ramps.
Based on estimates of 17% annual revenue growth, 13% operating margins, and a normalized P/E valuation multiple of 25x, the model projects Modine stock could rise from $159/share to $204/share.
That would be a 29% total return, or an 11% annualized return over the next 2.3 years.
Our Valuation Assumptions
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Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for MOD stock:
1. Revenue Growth: 17%
Modine delivered a strong second-quarter fiscal 2026 performance, with 12% total revenue growth driven by Climate Solutions momentum (24% growth) partially offset by Performance Technologies weakness (down 4%).
The company’s data center business accelerated by 42% year over year, generating $67 million in incremental revenue.
Management raised full-year fiscal 2026 guidance to 15-20% total company revenue growth, with Climate Solutions now expected to grow 35-40% (up from prior guidance).
Management now expects data center revenue to grow by more than 60% in fiscal 2026, with second-half year-over-year growth exceeding 90% as new production lines come online.
The company has visibility 3-5 years out with major customers, enabling strategic capacity planning. Modine is expanding from a low single-digit market share several years ago to an estimated 15-20% share at the $2 billion revenue level.
We used a 17% forecast, reflecting Modine’s ability to capture data center cooling demand through capacity expansion and product innovation while managing the transition from low-volume to high-volume production.
2. Operating margins: 13%
In the second quarter of fiscal 2026, Modine achieved adjusted EBITDA margins of 14%, down from the prior year due to significant investments in data center capacity expansion that temporarily pressured Climate Solutions’ margins.
Climate Solutions segment margins declined year-over-year despite 24% revenue growth, impacted by approximately 225-250 basis points (or $10-12 million) from data center expansion costs.
These costs included direct and indirect labor, overhead, and materials for building new production lines across multiple facilities.
Management expects sequential margin improvement in Q3 fiscal 2026, but margins will remain below normal levels until Q4 when significant production volumes from new facilities begin flowing through.
We forecast 13% operating margins, reflecting management’s near-term guidance while recognizing the substantial margin expansion opportunity as facilities mature.
This accounts for fiscal 2026-2027 being an investment period, with capacity capable of supporting more than $2 billion in revenue (not requiring three shifts, seven days per week), enabling high incremental margins as volumes grow.
3. Exit P/E Multiple: 25x
Modine stock currently trades at a next-twelve-months P/E multiple of approximately 29x, reflecting its premium positioning in high-growth data center cooling markets and the market’s recognition of the substantial revenue growth runway ahead.
Historical P/E multiples show expanding valuations: 24.5x over the past year, 16x over the last five years, and an average of 14x over the last decade, demonstrating increasing investor confidence in the company’s transformation from industrial thermal management to premium data center solutions.
We maintain a 25x exit multiple given Modine’s execution capabilities, secular tailwinds from AI data center infrastructure spending, and systematic approach to building sustainable competitive advantages through customer relationships and manufacturing scale.
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What Happens If Things Go Better or Worse?
Different scenarios for MOD stock through 2030 show varied outcomes based on capacity ramp execution and data center market dynamics (these are estimates, not guaranteed returns):
- Low Case: Production inefficiencies persist and hyperscaler demand moderates → 4% annual returns
- Mid Case: Successful facility ramp and steady market share gains with major customers → 10% annual returns
- High Case: Strong execution across 18 chiller lines and accelerated modular data center adoption → 16% annual returns
Even in the conservative case, Modine stock offers positive returns, supported by its thermal management expertise and proven ability to maintain hyperscaler relationships and engineering capabilities, while competitors struggle with customization limitations and manufacturing scale constraints.
The upside scenario for MOD stock could deliver exceptional performance if the company successfully ramps all 18 chiller production lines during the multi-year capacity expansion while capturing additional business through modular data center products.
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How Much Upside Does Modine Stock Have From Here?
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All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
