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M/I Homes (MHO)
NYSE:MHO
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M/I Homes
(NYSE:MHO)
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Rating:71Outperform
Price Target:
$146.00
▲(3.49% Upside)
Action:DowngradedDate:01/29/26
The score is driven primarily by solid (but cooling) financial performance—especially margin compression and weaker cash conversion—tempered by a notably low P/E. Technical indicators are neutral, and the latest earnings call reinforced strong balance-sheet flexibility and improving orders, but also underscored ongoing margin and inventory-related risks.
Positive Factors
Balance sheet and liquidity
Extremely strong liquidity and minimal net leverage provide durable financial flexibility to fund lot buys, weather housing cycles, repurchase shares, and absorb unexpected charges. That structural balance-sheet strength reduces refinancing and solvency risk over the next several quarters.
Consistent profitability and operating efficiency
Sustained gross margins near 25% and double-digit net margins indicate structural operating efficiency in homebuilding and favorable product mix. This margin base supports cash generation and reinvestment capacity even if volumes ebb, underpinning longer-term earnings resiliency.
Controlled land/lot supply
Substantial owned and optioned lot inventory gives lasting strategic flexibility to scale communities and moderate land spend timing. Option control reduces upfront capital commitment, allowing M/I to pace starts to demand and protect margins across multi-quarter cycles.
Negative Factors
Margin compression and impairment charges
Significant year-over-year margin erosion and sizable one-time inventory/warranty impairments show cost and pricing pressure. If driven by structural demand shifts at entry-level price points, margins may remain constrained, limiting free cash flow and return on capital for multiple quarters.
Notable revenue decline
A near-25% trailing revenue decline materially reduces operating leverage and the firm's ability to cover fixed costs. Persistent top-line weakness can depress margins, slow lot turnover, and delay recovery in earnings and cash flow even as management pursues operational fixes.
Rising finished and unsold inventory
Elevated and rising completed inventory ties up capital and increases exposure to price corrections, especially in pressured entry-level segments. Higher carrying and holding risk can force future impairments or discounting, pressuring margins and cash conversion over ensuing quarters.
M/I Homes (MHO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.66B
Dividend YieldN/A
Average Volume (3M)248.34K
Price to Earnings (P/E)9.5
Beta (1Y)0.87
Revenue Growth4.77%
EPS Growth-9.30%
CountryUS
Employees1,760
SectorConsumer Cyclical
Sector Strength84
IndustryResidential Construction
Share Statistics
EPS (TTM)3.91
Shares Outstanding25,767,710
10 Day Avg. Volume223,645
30 Day Avg. Volume248,337
Financial Highlights & Ratios
PEG Ratio-0.33
Price to Book (P/B)1.08
Price to Sales (P/S)0.77
P/FCF Ratio28.33
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue0.92
Enterprise Value/Gross Profit4.00
Enterprise Value/Ebitda6.52
Forecast
1Y Price Target
$165.00Price Target Upside16.96% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)14.76
Revenue Forecast (FY)$4.37B
M/I Homes Business Overview & Revenue Model
Company DescriptionM/I Homes, Inc., together with its subsidiaries, operates as a builder of single-family homes in Ohio, Indiana, Illinois, Minnesota, Michigan, Florida, Texas, North Carolina, and Tennessee. The company operates through Northern Homebuilding, Southern Homebuilding, and Financial Services segments. It designs, constructs, markets, and sells single-family homes and attached townhomes to first-time, millennial, move-up, empty-nester, and luxury buyers under the M/I Homes brand name. The company also purchases undeveloped land to develop into developed lots for the construction of single-family homes, as well as for sale to others. In addition, it originates and sells mortgages; and serves as a title insurance agent by providing title insurance policies, examination, and closing services to purchasers of its homes. The company was formerly known as M/I Schottenstein Homes, Inc. and changed its name to M/I Homes, Inc. in January 2004. M/I Homes, Inc. was founded in 1976 and is based in Columbus, Ohio.
How the Company Makes MoneyM/I Homes generates revenue primarily through the sale of newly constructed homes. The company's revenue model relies on several key streams: the direct sale of homes, which includes both standard models and custom builds, and home financing services provided to buyers. The company also profits from the sale of lots and land development, which enables them to control their building sites. Significant partnerships with suppliers and subcontractors help M/I Homes manage costs effectively and maintain quality. Additionally, favorable market conditions, such as low interest rates and increased demand for housing, contribute positively to its earnings.
M/I Homes Earnings Call Summary
Earnings Call Date:Jan 28, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Neutral
The call conveyed a balanced message: the company emphasized a very strong balance sheet, record equity, solid liquidity, mortgage/financial services strength, community growth and operational improvements, while also acknowledging meaningful margin compression, $59 million of inventory/warranty charges (concentrated in entry-level communities), and a decline in EPS and pretax income versus the prior year. Management highlighted improving order trends late in the year (Q4 new contracts +9% YoY and southern region strength) and expects to leverage flexibility in lot control and continued execution to navigate 2026, but cautioned margins remain under pressure.Q4-2025 Updates
Positive Updates
Strong Balance Sheet and Liquidity
Ended 2025 with $689 million cash, zero borrowings under a $900 million revolver, a debt-to-capital ratio of 18% and net debt-to-capital of 0%, positioning the company in its 'best financial condition' in history.
Record Shareholders' Equity and Book Value
Shareholders' equity reached an all-time high of $3.2 billion, up 8% year-over-year, with record book value per share of $123.
Solid Profitability Despite Headwinds
Full-year pretax income (excluding $59 million of inventory and warranty charges) was nearly $590 million, representing a 13% pretax margin pre-charges and a 12% pretax margin after charges.
Deliveries, Revenue and EBITDA
Delivered 8,921 homes in 2025 and reported full-year revenue of $4.4 billion; generated approximately $608 million of EBITDA for the full year.
Fourth-Quarter Order Momentum
New contracts improved in Q4 with a 9% year-over-year increase for the quarter (monthly: Oct +18%, Nov +6%, Dec +4%), and Q4 sales pace improved to 2.8 from 2.7 year-over-year; southern region Q4 orders increased 13% and northern region +4%.
Mortgage & Financial Services Performance
Financial services delivered record capture rates (93% for the year, mortgage capture 94% in Q4), record volume levels and pretax income of $56 million for the year; Q4 mortgage/title pretax income was $8.5 million.
Share Repurchases and Capital Return
Repurchased $200 million of stock in 2025 (including $50 million in Q4), have $220 million remaining repurchase authority, and have bought ~13% of outstanding shares over the last three years.
Operational Improvements
Construction costs improved (~2% reduction year-over-year) and cycle time shortened by ~5%, supporting margin management and execution; average buyer credit score remained strong at 747 with average down payments near 17% (~$90,000).
Inventory and Lot Supply Flexibility
Company owns ~26,000 lots and controls an additional ~24,000 via options (total ~50,000 lots — roughly a 5–6 year supply); 49% of lots are option-controlled, providing flexibility to react to demand.
Community Growth and Store Openings
Ended 2025 with 232 active communities (up from 220, ~5% increase), opened 81 new communities during the year, and expect average 2026 community count to be ~5% higher.
Negative Updates
Margin Compression Year-over-Year
Full-year gross margin (excluding $59 million charges) was 24.4%, down 220 basis points versus 2024; Q4 gross margin was 18.1% including $51 million of Q4 charges and 22.6% excluding those charges.
Material Inventory and Warranty Charges
Recorded $59 million of inventory and warranty charges for the year (Q4 charges $51 million comprised of $40 million inventory impairments and $11 million warranty charges), primarily related to entry-level communities (ASP < $375k) and two Florida communities.
Earnings and EPS Decline
Full-year pretax income (excluding charges) of nearly $590 million was down 20% from last year's record $734 million; diluted EPS decreased 25% year-over-year to $14.74 from $19.71.
Regional Performance Imbalances
For the full year, new contracts fell 1% in the southern region and 9% in the northern region; deliveries decreased in parts of the northern region (e.g., 8% decrease in Q4 deliveries for the northern region).
Higher Inventory and Finished Lots Investment
Total homebuilding inventory rose to $3.4 billion (up 9% YoY); completed inventory homes increased to 1,030 from 706 a year ago and total inventory homes grew to 2,779 from 2,502, raising exposure to unsold inventory.
Pressure at Entry-Level Price Points
Impairments were concentrated in the most affordable communities (average selling prices below $375,000), with notable pressure in Austin and San Antonio, indicating challenges in lower price tiers.
SG&A and Margin Headwinds
SG&A in Q4 was 11.6% of revenue (up from 11.0% prior-year quarter), and management expects margins to remain under pressure into 2026, with uncertainty whether margin pressure will be as severe as 2025.
Owned Lots Down in Southern Region
Owned and controlled lot totals are down ~2,000 lots year-over-year (company-wide own lots in southern region decreased 11% YoY), which may constrain near-term inventory positioning in certain southern markets.
Company Guidance
Management offered limited formal guidance but did provide a few clear metrics: they expect average 2026 community count to be about 5% above 2025 (company ended 2025 with 232 active communities after opening 81 new communities) and expect a 2026 effective tax rate of roughly 23.5%, while declining to give margin guidance; they reiterated continued use of mortgage‑rate buydowns (targeting a sub‑5% 30‑year fixed—~4.875%—often with a 2/1 temporary buydown) supported by a high mortgage capture (94% in Q4; record ~93% for the year) and financial‑services pretax income of $56M for 2025. Management emphasized balance‑sheet strength underpinning growth: $689M cash, zero borrowings on a $900M revolver, 18% debt‑to‑capital (net debt‑to‑cap ~0%), ~26,000 owned lots (~<3‑year supply) plus ~24,000 option‑controlled lots for a total ~50,000 lots (~5–6‑year supply, 49% via options), $220M available repurchase authority, and debt maturities in 2028 and 2030.M/I Homes Financial Statement Overview
Summary
Profitability remains solid (2025 net margin ~9.1%, EBIT margin ~11.9%) and leverage is moderate (debt-to-equity ~0.34), but fundamentals cooled versus 2024 with margin compression, slight revenue decline, ROE down to ~12.7%, and weaker/volatile cash generation (OCF down; cash flow covered net income at ~0.76x).Income Statement
Profitability remains solid, with 2025 net margin at ~9.1% and healthy operating profitability (EBIT margin ~11.9%), but performance has clearly cooled versus 2024 (net margin ~12.5%, EBIT margin ~16.3%). Revenue slipped slightly in 2025 after prior growth, and both gross and operating margins compressed year over year—suggesting a less favorable pricing/cost environment or mix shift. Overall, still profitable and above-average, but momentum has weakened from the prior peak.78
Positive
Balance Sheet
Leverage is moderate and generally improved versus earlier years, with debt-to-equity at ~0.34 in 2025 (better than 2021–2022 levels), providing reasonable balance-sheet flexibility for a cyclical homebuilder. Equity has grown materially over time, supporting the asset base. The main watch-out is return on equity stepping down to ~12.7% in 2025 from ~19.2% in 2024, indicating reduced efficiency/profit generation on the expanded equity base.74
Positive
Cash Flow
Cash generation is more volatile than earnings: operating cash flow fell to ~$137M in 2025 and declined sharply versus the prior year, while free cash flow also dropped materially. Cash flow covered net income at ~0.76x in 2025 (better than 2024’s low level, but still below 1.0x), implying working-capital/inventory dynamics are absorbing cash. While 2023 showed very strong cash conversion, the recent downshift and variability are key risks for a cyclical business.58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 4.42B | 4.50B | 4.03B | 4.13B | 3.75B |
| Gross Profit | 1.02B | 1.20B | 1.01B | 1.04B | 908.91M |
| EBITDA | 566.67M | 749.06M | 621.77M | 652.06M | 532.63M |
| Net Income | 402.94M | 563.73M | 465.37M | 490.66M | 396.87M |
Balance Sheet | |||||
| Total Assets | 4.78B | 4.55B | 4.02B | 3.71B | 3.24B |
| Cash, Cash Equivalents and Short-Term Investments | 689.19M | 822.00M | 736.22M | 311.33M | 236.37M |
| Total Debt | 1.09B | 1.04B | 917.15M | 999.52M | 1.01B |
| Total Liabilities | 1.61B | 1.61B | 1.51B | 1.64B | 1.62B |
| Stockholders Equity | 3.17B | 2.94B | 2.52B | 2.07B | 1.62B |
Cash Flow | |||||
| Free Cash Flow | 120.73M | 171.32M | 546.36M | 174.74M | -42.12M |
| Operating Cash Flow | 130.34M | 179.74M | 552.13M | 184.07M | -16.82M |
| Investing Cash Flow | -59.74M | -54.90M | -18.63M | -27.38M | -51.72M |
| Financing Cash Flow | -202.98M | -36.07M | -112.24M | -81.52M | 44.10M |
M/I Homes Technical Analysis
Positive
141.07
Price Trends
135.89
Positive
134.11
Positive
130.16
Positive
Market Momentum
1.98
Positive
50.63
Neutral
21.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MHO, the sentiment is Positive. The current price of 141.07 is above the 20-day moving average (MA) of 141.01, above the 50-day MA of 135.89, and above the 200-day MA of 130.16, indicating a neutral trend. The MACD of 1.98 indicates Positive momentum. The RSI at 50.63 is Neutral, neither overbought nor oversold. The STOCH value of 21.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MHO.
M/I Homes Risk Analysis
M/I Homes disclosed 32 risk factors in its most recent earnings report. M/I Homes reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
M/I Homes Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $3.41B | 9.79 | 20.37% | ― | 6.62% | -1.90% | |
71 Outperform | $3.66B | 9.55 | 13.20% | ― | 4.77% | -9.30% | |
70 Outperform | $4.10B | 10.54 | 10.70% | 1.76% | -10.01% | -27.81% | |
69 Neutral | $3.92B | 17.07 | 7.25% | ― | -16.60% | -29.85% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $5.18B | 12.20 | 8.76% | 2.62% | -6.06% | -32.39% | |
51 Neutral | $1.21B | 16.29 | 3.51% | ― | -20.62% | -45.74% |
* Consumer Cyclical Sector Average
MHO
M/I Homes
141.07
24.15
20.66%
KBH
KB Home
63.47
3.50
5.83%
MTH
Meritage
75.44
4.12
5.78%
TPH
Tri Pointe
46.30
15.09
48.35%
LGIH
LGI Homes
51.96
-21.67
-29.43%
GRBK
Green Brick Partners
77.69
16.49
26.94%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.