Simple Concepts Research Group

Assessing Modine Manufacturing (NYSE: MOD) After Earnings

by | Feb 8, 2022 | 52 Week Lows, Stock Picks

modine manufacturing mod stock valuation

Modine Manufacturing (MOD) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Modine Manufacturing (MOD) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Modine Manufacturing Fundamentals

MOD Stock Rating

Stock Price Target: $16.57

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Modine Manufacturing in comparison to the Auto Parts industry and the S&P 500.

Modine Manufacturing is a Small Cap company with a Market Cap of $556.8M.

How are investors using Modine Manufacturing earnings yield to assess the company?

Modine (MOD)_ Earnings Yield in Comparison to the Auto Parts Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Modine Manufacturing is 14.95%, in comparison to 3.90% for the S&P 500 and 1.93% for the 10-year treasury bond. The median earnings yield for the Auto Parts industry is 12.72%.

What does Modine Manufacturing Price-to-Earnings Ratio (P/E) tell investors about the company?

Modine (MOD)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Auto Parts Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Modine Manufacturing is currently trading at a P/E of 8.75. The P/E for the Auto Parts industry is 44.34 and the P/E for the S&P 500 is 25.66.

What is the current Price-to-Sales Ratio (P/S) for Modine Manufacturing?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Modine Manufacturing is currently trading at a P/S of 0.29. The P/S for the Auto Parts industry is 0.86 and the P/S for the S&P 500 is 2.98.

How does Modine Manufacturing Price-to-BookRatio (P/B) compare to the Auto Parts industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Modine Manufacturing P/B ratio is 1.52. The P/B for the Auto Parts industry is 2.95 and the P/B for the S&P 500 is 4.58.

How attractive is Modine Manufacturing Return on Invested Capital (ROIC) to investors?

Modine (MOD)_ Return on Invested Capital in Comparison to the Auto Parts Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Modine Manufacturing ROIC is currently 7.87% in comparison to -0.48% for the Auto Parts industry and 9.10% for the S&P 500.

Modine (MOD)_ Price Target & 52-Week Price Range

How has MOD stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, Modine Manufacturing has traded between the range of $8.60 and $18.54.

The current Analyst Price Target for Modine Manufacturing is $16.57.

What is Modine Manufacturing YOY Performance in comparison to its industry and the total market?

The YOY performance for Modine Manufacturing is -31.22%. The Auto Parts industry has a YOY performance of -8.61% in comparison to the YOY S&P 500 performance of 15.36%.

Modine (MOD)_ YOY Performance in Comparison to the Auto Parts Industry and the S&P 500

Recent Financial Results

  • Net sales of $502.2M increased 4% from the prior year
  • Operating income of $79.4M increased $188.1M from the prior year, primarily due to impairment charges related to the Automotive segment recorded in the prior year and the reversal of a portion of those charges in the current year
  • Adjusted EBITDA of $39.3M decreased $7.4M from the prior year
  • Earnings per share of $1.41 and adjusted earnings per share of $0.31

Stock Price Target: $16.57

Company Overview

MOD Stock Rating

Modine Manufacturing Company provides engineered heat transfer systems and heat transfer components for use in on- and off-highway original equipment manufacturer (OEM) vehicular applications. It operates through Building HVAC Systems, and Heavy Duty Equipment and Automotive segments.

The company has operations in North America, South America, Europe, the Asia/Pacific, the Middle East, and Africa. Modine Manufacturing Company was incorporated in 1916 and is headquartered in Racine, Wisconsin. The current CEO is Neil D. Brinker.

Be sure to add Modine Manufacturing (MOD) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.