Investment Thesis
Modine demonstrates solid operational performance with 7.3% revenue growth and healthy interest coverage of 9.0x, indicating manageable debt levels. However, profitability metrics are concerning—net margin of 2.2% is thin, ROE of 4.3% is weak, and negative free cash flow of -47.4M indicates capital intensity exceeds operational cash generation, limiting financial flexibility.
Strengths
- Revenue growth of 7.3% YoY shows market demand and top-line expansion
- Strong interest coverage ratio of 9.0x indicates low default risk and manageable debt burden
- Solid liquidity position with current ratio of 2.19x and quick ratio of 1.28x
- Gross margin of 23.2% provides reasonable manufacturing efficiency
Risks
- Net margin of 2.2% is extremely thin, leaving minimal room for operational disruptions or market downturns
- Negative free cash flow of -47.4M despite positive operating cash flow signals capital expenditures exceed cash generation, limiting dividend capacity and acquisition flexibility
- ROE of 4.3% and ROA of 1.9% are weak, indicating poor returns on shareholder and asset investment relative to cost of capital
- Net income declined 0.8% YoY despite 7.3% revenue growth, suggesting margin compression from rising costs
Key Metrics to Watch
- Free cash flow trend and FCF margin expansion—critical for debt reduction and operational sustainability
- Net margin improvement—need to see if revenue growth can translate to bottom-line profitability gains
- Capital efficiency—monitor capex spending relative to revenue to determine if investments yield future returns
- Operating margin sustainability—track whether 10.7% margin can be maintained amid competitive and inflationary pressures
Financial Metrics
Revenue
2.2B
Net Income
48.2M
EPS (Diluted)
$0.90
Free Cash Flow
-47.4M
Total Assets
2.5B
Cash
98.7M
Profitability Ratios
Gross Margin
23.2%
Operating Margin
10.7%
Net Margin
2.2%
ROE
4.3%
ROA
1.9%
FCF Margin
-2.1%
Balance Sheet & Liquidity
Current Ratio
2.19x
Quick Ratio
1.28x
Debt/Equity
0.51x
Debt/Assets
54.5%
Interest Coverage
9.03x
Long-term Debt
570.7M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-02T04:14:11.047679 |
Data as of: 2025-12-31 |
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