Modine Manufacturing ((MOD Quick QuoteMOD - Free Report) ) has been a worldwide leader in thermal management since 1916 for machinery and factories. But in the past few years, they've become a key supplier to the datacenter infrastructure buildout.

Modine, based in my backyard in Racine, WI, designs, engineers, tests, and manufactures heat transfer products for a wide range of applications and markets. Here's how they describe their business...

Our technologies heat, cool, and ventilate the places you go and things you see every day, with systems that drive performance, efficiency, and reliability for our customers. From pioneering advanced data center cooling to heat management for modern and next-gen engines, we deliver innovative, differentiated solutions.

Another Strong Beat-and-Raise Quarter

On July 30, Modine delivered earnings per share (EPS) of $1.06, beating the Zacks Consensus Estimate of $0.93 per share by 14%. This was their Q1 for fiscal year 2026 which ends in March.

Over the last four quarters, the company has surpassed consensus EPS estimates four times, including +18% and +16% positive surprises for the previous two quarters.

Modine posted revenues of $682.8 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 4.87%. This compares to year-ago revenues of $661.5 million. The company has also topped consensus revenue estimates four times over the last four quarters.

And the key icing on the thermal cake was this headline on the earnings press release...

"Raising guidance for fiscal 2026 based on improved outlook for data center sales resulting from planned capacity expansion coupled with impact from recent acquisitions."

Investing to Expand Capacity

That raising of guidance was foreshadowed by a company announcement the day before...

Modine Announces New $100 Million Investment to Expand Capacity for North American Data Centers Business

On July 29, the Modine release stated "Expansion plan includes new manufacturing facilities and increased production capacity for critical equipment supporting Airedale by Modine™ total data center cooling solutions, in response to unprecedented demand from U.S. hyperscale and colocation data center customers."

As I told my TAZR Trader members where we bought MOD shares in the $90s last month...

This makes perfect sense. When we are about to see the top 10 behemoths who are building datacenters spend $600 billion this year, Modine needs to be expanding rapidly to meet the demand for cooling solutions.

Precision-Engineered Cool

Because of their thermal expertise and consistent execution track-record, Modine is now expecting data center sales to grow in excess of 45% this year.

My colleague Tracey Ryniec recognized their potential two years ago when she bought MOD shares at $47 for her Value Investor portfolio. She attended the Modine conference call on July 31 and here were some of her live posts on X...

@TraceyRyniec: Modine is working with a "very important customer" to develop a product that will get that customer to the market faster in data centers. Cuts the time down to just a few months. Will make it in Calgary.

@TraceyRyniec: Continue to win new programs in data centers. It started out slow in Q1 at 15%. But some customers have asked to increase volumes or accelerate volumes. Needed the capacity to support it and to meet order book for next year. Acceleration in 2H.

@TraceyRyniec: One large order in the DC area of $180 million. Is there other business of this magnitude out there? A: Yes, this is what drove the $100 million in spending. Expects orders of this kind of magnitude.

@TraceyRyniec: Loves the growth in data center but will be actively growing the funnel in HVAC technologies. Believes in being diversified in all its businesses.

@TraceyRyniec: The analysts on the Modine CC sounded like a lot of people in 2023 when NVIDIA was posting crazy revenue growth. How can this be real? Is it sustainable? First half data center growth was 20-25% but second half expected to be 80%. Next phase of AI Revolution hitting now.

On this last post, Tracey nails it. Investors and analysts are still underestimating the growth potential of the AI Economy. Recall that $600 billion capex for infrastructure I mentioned earlier. Conservative estimates from Goldman Sachs and Bank of America place that annual spend at over $1 trillion in 2028.

And it doesn't stop there with the volume of autonomous machines, including self-driving cars and humanoid robots, that need to be supported by GPU-accelerated datacenters -- all of which we need lots of cooling solutions.

NVIDIA ((NVDA Quick QuoteNVDA - Free Report) ) CEO Jensen Huang estimates that humanoid robots will become the next multi-trillion-dollar industry. Just imagine when factory floors of robots are making other robots and machinery. Yep, more cooling.

The Environmental Mission

It's been trendy and slick to tag one's company as "green" and "eco-friendly." But Modine isn't being either when they explain how their technologies can pragmatically serve this giant new industry in more sustainable ways.

Under the banner of being "driven by our purpose of Engineering a Cleaner, Healthier World™" the company cites 5 core outcomes they are achieving...

>Reduce water and energy consumption
>Improve indoor air quality
>Use environmentally friendly refrigerants
>Enable cleaner-running vehicles
>Lower harmful emissions

Bottom line: Modine is in a prime position to benefit from the global AI infrastructure buildout. I will remain long shares of MOD looking for new highs above $150 soon. I don't think the gap back to $113 gets filled and investors should add to positions in the $120s.