# Modine (MOD): Data Center Sales Up 95%, Stock Down 21% on Margin Worries

> Modine Manufacturing grew data center sales 95% and raised its segment Outlook, yet the stock fell about 21% on November 4, 2026, after an earnings miss, thinner margins and negative free cash flow. A contrarian investor on X says he holds long-dated calls. We check the margin path, orders and the November 18 investor day.

By MCAFax · Published November 5, 2026
Section: Markets & Main Street › From Wall Street · Series: Market Calls, Investigated (https://mcafax.com/notebook/series/market-calls-investigated)
Canonical: https://mcafax.com/notebook/mod-modine-data-center-sales-up-95-percent-stock-down-24
Source: MCAFax, The Broker's Notebook (https://mcafax.com/notebook). MCAFax is not a lender or a law firm.

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Modine Manufacturing (NYSE: MOD) grew data center sales 95% and raised its segment Outlook, yet the stock closed about 21% lower on November 4, 2026, after an earnings miss and thinner margins. Deep Sail Capital, a contrarian investor on X who called MOD "crazy cheap" in October, said that day that he holds long-dated call options on it. The question is whether the selloff prices in a margin problem that management says is temporary.

*This is journalism and commentary, not investment advice. We hold no position unless stated.*

## Key facts

- **Price:** MOD closed at $125.45 on November 3, 2026, before the results. On November 4 it closed at $98.56, down 21.4%, per Yahoo Finance, near the low of a 52-week range of $93.55 to $323.25.
- **Quarter:** sales rose 35% to $994.4 million and adjusted EBITDA rose 31% to $136.2 million in the quarter to September 30, [per the company](https://investors.modine.com/news/news-details/2026/Modine-Reports-Second-Quarter-Fiscal-2027-Results/default.aspx). That quarter still included the Performance Technologies unit spun off to Gentherm on October 1.
- **Earnings:** adjusted EPS was $1.35, up 27% but below a $1.42 forecast. Net earnings fell 32% to $30.3 million, including $29.5 million of spin-related tax.
- **Data Centers:** sales rose 95% to $439.7 million; gross margin fell 470 basis points to 19.7%, which the company tied to material, component and tariff costs.
- **Outlook:** fiscal 2027 sales of $3.1 billion to $3.2 billion and adjusted EBITDA of $470 million to $500 million for the continuing company, with data center sales up 80% to 90%.
- **Cash:** free cash flow was negative $140.6 million in the quarter, and net debt was $573.7 million at September 30.

## Is MOD a good bet right now?

That depends on margins, not demand. Demand looks strong: Modine reported more than $1 billion of quarterly orders for the first time and a hyperscale award worth more than $400 million, [per its slides](https://www.sec.gov/Archives/edgar/data/67347/000110465926122032/mod-ex99d2.htm). But the data center margin keeps slipping, cash went out the door to build capacity, and the drop came on a day when data center stocks sold off broadly. Investors appear to want proof that price increases will catch up with costs.

## Why are investors bullish on Modine?

- **Raised segment Outlook.** Management lifted its data center growth forecast to 80% to 90% and its Commercial HVAC forecast to 10% to 15%.
- **A margin path.** The CFO guided to a data center EBITDA margin of 16.5% to 17.5% in the third quarter and 20% or more in the fourth, from 15.4% in the second.
- **Capacity.** Modine runs 13 chiller lines and targets 20 by the fiscal year-end.
- **Buyback option.** Asked about repurchases with the stock below $100, the CFO said it "will clearly be a topic with our board."

## Who's making this call and why?

Deep Sail Capital ([@DeepSailCapital](https://x.com/DeepSailCapital)) is a contrarian long/short account with about 57,500 followers. On October 23 it [wrote](https://x.com/DeepSailCapital/status/2113637736750125513): "$MOD Is crazy cheap here post spin." On November 4, as the stock fell, it [replied](https://x.com/DeepSailCapital/status/2118024616543474093) to a follower asking about its holdings: "Leaps on $MOD $CRDO". LEAPs are call options that run a year or more; no strike or expiry was given. We log that post as a reiteration.

**Track record.** In our tracking, Deep Sail Capital is 13-12 (a .520 win rate) on 25 calls scored at 180 days against the S&P 500, with an average edge of +8.9 points. Its last 10 scored calls went 2-8, and its longs are 4-8 while its shorts are 9-4. Through the November 3 close, before the drop, its first MOD call, at $149.78, trailed the index by about 14 points and its October 23 reiteration, at $135.17, by about 6 points; both are provisional. See the [scoreboard](https://mcafax.com/notebook/market-calls-scoreboard).

**Other supporters:** Diligent Plane, a large retail account whose bio cites unverified returns, [wrote](https://x.com/DiligentPlane/status/2107206507590770830) on October 5 that "$MOD is now a completely different story after the spin off". MOD closed at $182.91 that day.

## Who disagrees?

Capex Circuit, an account that says it makes no stock calls, [noted](https://x.com/RaphFieldNotes/status/2105456274494341188) on October 1 that the spin sharpens Modine's AI exposure and also its sensitivity to a peak in capex. The quarter added more reasons for caution:

- **Margins.** Management said margins will improve "at a lower rate than originally anticipated," citing supplier cost increases.
- **Cash needs.** Capital spending of $150 million to $200 million this year and an inventory build pushed free cash flow negative for the first half.
- **Concentration.** Growth rests on a handful of hyperscale customers, and the company said its main risk is hitting their delivery schedules.

## What are the key facts to verify?

- The [Q2 fiscal 2027 release](https://investors.modine.com/news/news-details/2026/Modine-Reports-Second-Quarter-Fiscal-2027-Results/default.aspx) for segment sales, margins and the Outlook.
- The [investor slides](https://www.sec.gov/Archives/edgar/data/67347/000110465926122032/mod-ex99d2.htm) for orders, the hyperscale award and chiller lines.
- The November 4, 2026 close of $98.56 (down 21.4% from $125.45).
- New long-term targets at Modine's Analyst and Investor Day on November 18, 2026.

## What would prove it right or wrong?

**Right:** data center EBITDA margins reach 20% or more by the fourth quarter, record orders turn into sales, full-year free cash flow ends positive and the November 18 targets back the growth story.

**Wrong:** margins stall in the mid-teens, supplier costs keep outrunning price increases, hyperscalers slow orders, or Modine trims its Outlook, and MOD stays near its 52-week low.

*This is journalism and commentary, not investment advice. We hold no position unless stated.*

## Questions readers ask

**What did Modine (MOD) report for its fiscal second quarter of 2027?**

Modine Manufacturing (NYSE: MOD) reported sales of $994.4 million for the quarter to September 30, 2026, up 35%, and adjusted EBITDA of $136.2 million, up 31%. Adjusted EPS was $1.35, up 27% but below a $1.42 forecast. Net earnings fell 32% to $30.3 million, including $29.5 million of tax tied to the Performance Technologies spin-off.

**Why did Modine (MOD) stock fall on November 4, 2026?**

Modine (MOD) closed at $98.56 on November 4, 2026, down 21.4% from its $125.45 close the day before, per Investing.com. The company missed the adjusted EPS forecast, data center gross margin fell to 19.7% and free cash flow was negative $140.6 million in the quarter. Data center stocks also sold off broadly that day.

**How fast is Modine's data center business growing?**

Modine's (MOD) Data Centers sales rose 95% to $439.7 million in the September 2026 quarter. Management now expects data center sales to grow 80% to 90% in fiscal 2027 and reported more than $1 billion of quarterly orders for the first time.

**What is Modine's fiscal 2027 Outlook?**

For the continuing company, excluding the spun-off Performance Technologies unit, Modine (MOD) expects fiscal 2027 sales of $3.1 billion to $3.2 billion, up 50% to 55%, and adjusted EBITDA of $470 million to $500 million. It expects Commercial HVAC sales to grow 10% to 15% and capital spending of $150 million to $200 million.

**Why are Modine's data center margins falling?**

Modine (MOD) said its Data Centers gross margin fell 470 basis points to 19.7% because of higher material, component and tariff costs. On the call, management said supplier price increases are lingering longer than expected and that margins will improve at a slower rate than first planned.

**When does Modine expect margins to recover?**

Modine's (MOD) CFO guided to a data center EBITDA margin of 16.5% to 17.5% in the third fiscal quarter and 20% or more in the fourth, up from 15.4% in the second quarter. He cited higher volume and recovery of material costs from customers.

**Who is bullish on Modine (MOD)?**

Deep Sail Capital, a contrarian X account, called Modine (MOD) "crazy cheap" after the Gentherm spin on October 23, 2026, and said on November 4 that it holds long-dated call options, or LEAPs, on the stock. It did not give a strike or expiry.

**What is Deep Sail Capital's track record?**

In our tracking, Deep Sail Capital is 13-12 on 25 calls scored at 180 days against the S&P 500, with an average edge of +8.9 points. Its last 10 scored calls went 2-8, and its longs are 4-8. Through the November 3, 2026 close, before the drop, its Modine (MOD) calls trailed the index by about 14 and 6 points; both are provisional.

**Is Modine (MOD) buying back stock?**

Modine (MOD) has not announced a new buyback. Asked about repurchases with the stock below $100, its CFO said it will clearly be a topic with the board.

**What is the next catalyst for Modine (MOD)?**

Modine (MOD) holds an Analyst and Investor Day on November 18, 2026, in Chicago, where it plans to give new long-term targets and an Outlook for fiscal 2028 and 2029.

**What would prove the Modine bull case right or wrong?**

The case for Modine (MOD) gains support if data center margins reach 20% or more by the fourth quarter, orders keep turning into sales and full-year free cash flow ends positive. It weakens if margins stall in the mid-teens, supplier costs keep rising or hyperscalers slow orders.