Modine Manufacturing: Accelerating Trajectory With Further Upside

Summary

• Modine Manufacturing’s revenue has grown well at a CAGR of +5% during the last decade, but the real accomplishment is its EBITDA development of +10%.
• Management has executed a revitalization strategy, which involves the implementation of the 80/20 approach and the transition of its offering to more complex services.
• Management is forecasting HSD growth alongside margin improvement, allowing for growing distributions, international expansion, and opportunistic M&A.
• MOD spent much of the last decade being heavily undervalued. This is no longer the case, but we still see value due to the scope for greater shareholder returns.

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Investment thesis

Our current investment thesis is:

• MOD is likely in the early stages of a significant upswing, underpinned by industry tailwinds and a successful business model transition. We believe this will drive shareholder value, following a period

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.