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Is M/I Homes (MHO) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is M/I Homes (MHO - Free Report) . MHO is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 4.18, while its industry has an average P/E of 7.15. Over the last 12 months, MHO's Forward P/E has been as high as 9.28 and as low as 4.15, with a median of 6.69.

Another notable valuation metric for MHO is its P/B ratio of 1.22. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.52. Over the past 12 months, MHO's P/B has been as high as 1.59 and as low as 0.99, with a median of 1.20.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MHO has a P/S ratio of 0.51. This compares to its industry's average P/S of 0.8.

Finally, we should also recognize that MHO has a P/CF ratio of 5.06. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. MHO's current P/CF looks attractive when compared to its industry's average P/CF of 7.92. Over the past year, MHO's P/CF has been as high as 7.29 and as low as 4.48, with a median of 5.90.

These figures are just a handful of the metrics value investors tend to look at, but they help show that M/I Homes is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MHO feels like a great value stock at the moment.


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