Why Shares of Modine Manufacturing Co. Jumped Again Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Modine Manufacturing Co. jumped as much as 11% today after announcing a plant closure.

So what: Modine will close its manufacturing facility in McHenry, Illinois, and consolidate production in other facilities around the country. The plant closure will take approximately 18 months and will cost about $5 million, including $2 million in the fourth quarter of fiscal 2014. 

Now what: Modine is cutting costs in an effort to improve thin margins, which is probably a good move long term. But until I see solid results from these efforts, I'll take a cautious approach. Analysts are expecting a big jump in profits next year and, at 20 times earnings, there's downside risk if those results can't be hit.

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The article Why Shares of Modine Manufacturing Co. Jumped Again Today originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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