Modine Manufacturing Stock Drops After Weak Quarterly Sales, Mixed Guidance

Watch This Key Price Level

Key Takeaways

• Modine Manufacturing shares fell sharply ahead of Wednesday’s opening bell after the thermal-management solutions provider posted weaker-than-expected quarterly sales and issued mixed guidance. 
• The company is adding additional data center manufacturing capacity in the United States, Canada, and the United Kingdom.
• Modine Manufacturing shares find support around $94 level from a three-month horizontal line that sits in close proximity to the 50-day moving average.

Shares in Modine Manufacturing (MOD) dropped 9% in premarket trading Wednesday morning after the thermal-management solutions provider posted weaker-than-expected quarterly sales and issued mixed guidance as it tries a capture a slice of the booming artificial intelligence (AI) data center market.

For the quarter ending March 31, the Racine, Wisconsin-based company reported revenue of $603.5 million, down 2% from a year earlier and below the $605.4 million expected by analysts. Adjusted earnings in the period of 77 cents per share edged past Wall Street estimates by a penny.

Turning to forward guidance, the company expects full-year fiscal 2025 net sales growth of between 5% and 10%, which matches the consensus view. However, It projects adjusted earnings to range between $3.55 and $3.85 per share, with the $3.70 midpoint of that forecast coming in below analysts’ expectations of $3.81 a share.

Data Center Growth to Drive Sales

The company said it is adding additional data center manufacturing capacity in the United States, Canada, and the United Kingdom to meet the future needs of its clients.

“Overall, we expect revenue growth to be driven by continued strength in the data center market and growth in other targeted markets, partially offset by lower sales resulting from the impact of Performance Technologies divestitures and other planned reductions,” Modine CEO Neil Brinker said in the earnings release.

Though a McKinsey report projects data center demand in the United States to grow by 10% a year until 2030, the company’s climate solutions segment that houses its data center cooling products reported sales growth of just 1% in the March quarter. The stock’s post-earnings sell-off indicates that investors may be cautious over the division’s expansion before seeing further revenue improvement.

Watch if Modine Shares Close Below This Key Level

Modine Manufacturing shares have trended steadily higher over the past 12 months, with only several minor retracements. After climbing to a new all-time high (ATH) last week, the price eased slightly ahead of the company’s quarterly results. 

Amid expected earnings-driven weakness, investors should keep an eye on the $94 level, an area on the chart that finds support from a three-month horizontal line that sits in close proximity to the 50-day moving average. A close below this key technical level could see the stock test lower support situated around $81.50.

Modine shares were down 9% at $92.31 at around 7:15 a.m. ET.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above securities.

Read the original article on Investopedia.