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Is Modine's HVAC Business Set for a Turnaround in 2027?
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Key Takeaways
Modine's HVAC Technologies segment faced fiscal 2026 margin pressure from mix, costs and weather.
Modine projects Commercial HVAC sales growth of 5-10% in fiscal 2027 amid demand gains.
Modine's acquisitions added $119M in fiscal 2026 revenues and may aid results from Q2 fiscal 2027.
Modine Manufacturing Company’s (MOD - Free Report) HVAC Technologies segment faced margin pressure in fiscal 2026 due to an unfavorable product mix, elevated costs associated with integrating recent acquisitions and weather-related disruptions. Severe weather on the East Coast and in the Southern U.S. resulted in significant production downtime during the fourth quarter.
Despite these near-term challenges, the company remains optimistic about the segment’s outlook. The commercial HVAC business acquired through Scott Springfield is expected to rebound strongly in fiscal 2027 after a difficult year affected by tariff-related headwinds. Modine projects Commercial HVAC sales growth of 5% to 10% in fiscal 2027, supported by accelerating demand for its heating and indoor air quality products, as well as continued mid-single-digit growth in its coils business.
Modine’s recent acquisitions, AbsolutAire, L.B. White and Climate by Design, contributed $119 million in additional revenues during fiscal 2026. Beyond boosting sales, these acquisitions expanded Modine’s product portfolio and provided access to new end markets and distribution channels. The company expects the HVAC segment’s performance to improve beginning in the second quarter of fiscal 2027, as the company benefits from a full year of ownership of these acquired businesses. MOD carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HVAC Growth Drivers for Modine’s Competitors
In the first quarter of 2026, Trane Technologies plc’s (TT - Free Report) Commercial HVAC business delivered strong results, with Americas bookings reaching a record level, up about 40% year over year. Trane’s growth was fueled by robust demand for applied solutions. Trane’s Americas and EMEA backlog increased approximately $2.7 billion from year-end 2025, supported in part by the acquisition of Stellar Energy and continued momentum in data center cooling projects.
Carrier Global Corporation (CARR - Free Report) is seeing robust momentum in its Commercial HVAC business. In the first quarter, Carrier Global's total orders increased 11% year over year, driven by a 35% rise in global HVAC orders. Carrier Global also highlighted ongoing discussions related to data center projects in China and expects to secure additional Commercial HVAC opportunities in that market going forward.
MOD’s Price Performance, Valuation & Estimates
MOD has outperformed the Zacks Automotive-Original Equipment industry. Modine’s shares have rallied 98.1% compared to the industry’s growth of 2.2% in the last six months.
Image Source: Zacks Investment Research
From a valuation perspective, MOD appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 3.47, higher than the industry’s 2.26.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MOD’s fiscal 2026 and 2027 EPS has moved up 50 cents and $1.10, respectively, in the past 30 days.
View the Zacks #1 Rank List
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Is Modine's HVAC Business Set for a Turnaround in 2027?
Key Takeaways
Modine Manufacturing Company’s (MOD - Free Report) HVAC Technologies segment faced margin pressure in fiscal 2026 due to an unfavorable product mix, elevated costs associated with integrating recent acquisitions and weather-related disruptions. Severe weather on the East Coast and in the Southern U.S. resulted in significant production downtime during the fourth quarter.
Despite these near-term challenges, the company remains optimistic about the segment’s outlook. The commercial HVAC business acquired through Scott Springfield is expected to rebound strongly in fiscal 2027 after a difficult year affected by tariff-related headwinds. Modine projects Commercial HVAC sales growth of 5% to 10% in fiscal 2027, supported by accelerating demand for its heating and indoor air quality products, as well as continued mid-single-digit growth in its coils business.
Modine’s recent acquisitions, AbsolutAire, L.B. White and Climate by Design, contributed $119 million in additional revenues during fiscal 2026. Beyond boosting sales, these acquisitions expanded Modine’s product portfolio and provided access to new end markets and distribution channels. The company expects the HVAC segment’s performance to improve beginning in the second quarter of fiscal 2027, as the company benefits from a full year of ownership of these acquired businesses. MOD carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
HVAC Growth Drivers for Modine’s Competitors
In the first quarter of 2026, Trane Technologies plc’s (TT - Free Report) Commercial HVAC business delivered strong results, with Americas bookings reaching a record level, up about 40% year over year. Trane’s growth was fueled by robust demand for applied solutions. Trane’s Americas and EMEA backlog increased approximately $2.7 billion from year-end 2025, supported in part by the acquisition of Stellar Energy and continued momentum in data center cooling projects.
Carrier Global Corporation (CARR - Free Report) is seeing robust momentum in its Commercial HVAC business. In the first quarter, Carrier Global's total orders increased 11% year over year, driven by a 35% rise in global HVAC orders. Carrier Global also highlighted ongoing discussions related to data center projects in China and expects to secure additional Commercial HVAC opportunities in that market going forward.
MOD’s Price Performance, Valuation & Estimates
MOD has outperformed the Zacks Automotive-Original Equipment industry. Modine’s shares have rallied 98.1% compared to the industry’s growth of 2.2% in the last six months.
Image Source: Zacks Investment Research
From a valuation perspective, MOD appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 3.47, higher than the industry’s 2.26.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MOD’s fiscal 2026 and 2027 EPS has moved up 50 cents and $1.10, respectively, in the past 30 days.
Image Source: Zacks Investment Research