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A Look At Modine Manufacturing’s (MOD) Valuation After Expanding Its Credit Facility By $150 Million

Simply Wall St · 6d ago

Why Modine’s expanded credit facility matters for shareholders

Modine Manufacturing (MOD) recently amended its credit agreement, raising total revolving commitments by $150 million to $550 million and increasing capacity for up to $250 million in future incremental revolving commitments and term loans.

This financing move gives Modine more optionality around funding future projects or acquisitions, while also adding flexibility to replace lenders under certain conditions, an element some investors watch closely when assessing balance sheet tools.

See our latest analysis for Modine Manufacturing.

That extra credit capacity comes as Modine’s 1 day share price return of 5.47% and 7 day share price return of 3.39% contrast with a 30 day share price return decline of 13.54%. The 1 year total shareholder return of 14.68% sits alongside a very large 3 year total shareholder return and an even stronger 5 year total shareholder return, suggesting long term momentum has been strong even as shorter term sentiment has cooled.

If this kind of balance sheet move has you thinking about other industrial names, it could be a good moment to scan fast growing stocks with high insider ownership as a starting list of ideas.

With Modine trading at US$140.81 and sitting around a 30% discount to analyst price targets, and an implied intrinsic discount above 30%, you have to ask: is this a genuine mispricing, or is the market already factoring in future growth?

Most Popular Narrative: 23.1% Undervalued

With Modine shares last closing at US$140.81 against a narrative fair value of US$183, the valuation gap rests on some specific growth and margin assumptions.

The company's investments in U.S.-based manufacturing capacity and local-for-local supply chains, paired with modular data center offerings, create a unique ability to win and rapidly fulfill large customer orders. This improves visibility, expands addressable markets, and supports both revenue and long-term margin expansion. High levels of visibility into multi-year customer pipeline and backlog, enabled by deep integration with OEMs, strategic partnerships, and first-mover status with bespoke data center solutions, provide support for sustained earnings growth and a long runway for operating margin improvement as new capacity is utilized.

Read the complete narrative.

Want to see what kind of revenue runway and margin profile are baked into that US$183 figure? The narrative leans on brisk top line growth, rising profitability and a future earnings multiple usually reserved for faster growing sectors. Curious which exact earnings path and discount rate pull today’s fair value up to that level, even after factoring in execution risks?

Result: Fair Value of $183 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upbeat fair value story can unravel quickly if data center spending slows, or if recent acquisitions take longer to integrate and weigh on margins.

Find out about the key risks to this Modine Manufacturing narrative.

Build Your Own Modine Manufacturing Narrative

If you look at the same numbers and reach a different conclusion, or simply prefer to test your own assumptions, you can build a full narrative in minutes with Do it your way.

A great starting point for your Modine Manufacturing research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Modine has sharpened your appetite for opportunities, do not stop here. The right watchlist today can make a real difference to your future choices.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.