Is MOD Stock a Buy Now on Buyback Plan and Expanded CDU Offerings?

Core Viewpoint - Modine Manufacturing is taking strategic steps to enhance its growth potential, including a $100 million stock buyback and expansion of its coolant distribution units (CDUs) to meet rising demand from data centers [1][3][19]. Group 1: Growth Initiatives - The company is experiencing significant growth in its climate solutions segment, particularly in the data center business, which saw a 176$180 million in orders for its Airedale by Modine brand data center cooling systems from a leading AI infrastructure developer, with deliveries expected throughout 2025 and the first half of 2026 [4]. - The establishment of a new manufacturing facility in India is aimed at supporting data center cooling and power generation needs in the region [5]. - The HVAC & Refrigeration products segment achieved a 15% growth in Q3, driven by sales from the Scott Springfield acquisition [5]. Group 2: Financial Performance - Modine's adjusted EBITDA margin improved by 200 basis points in Q3, benefiting from a favorable sales mix in its Climate Solutions segment [6]. - For fiscal 2025, the company anticipates net sales between $2.55 billion and$2.67 billion, indicating a year-over-year growth of 6% to 11% [14]. - Adjusted EBITDA is expected to range from $375 million to$395 million, reflecting a growth of 19% to 26% year-over-year [14]. - The company forecasts a 110-120% growth in its data center segment for fiscal 2025 [15]. Group 3: Challenges - Modine is facing challenges in its Performance Technologies segment due to weaknesses in the automotive and commercial vehicle markets, impacting sales in liquid and air-cooled applications [7]. - Advanced solutions sales declined by 7% in Q3, attributed to supply chain issues affecting major North American bus customers [8]. Group 4: Stock Performance and Valuation - Modine shares have decreased by 25.2% over the past six months, underperforming both the Zacks Auto, Tires and Trucks sector and the broader S&P 500 index [9][10]. - The stock is currently trading at a forward 12-month price/earnings ratio of 17.26x, lower than its median of 28.43x and the sector's 20.13x, indicating it may be undervalued [12]. - The Zacks Consensus Estimate for Modine's fiscal 2025 EPS is currently $3.88, reflecting a slight increase over the past month [16].