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Why M/I Homes (MHO) Might be Well Poised for a Surge

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M/I Homes (MHO - Free Report) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.

Analysts' growing optimism on the earnings prospects of this homebuilder is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For M/I Homes, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $3.78 per share, which is a change of +5.59% from the year-ago reported number.

The Zacks Consensus Estimate for M/I Homes has increased 6.48% over the last 30 days, as one estimate has gone higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $16.11 per share represents a change of +21.31% from the year-ago number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for M/I Homes. Over the past month, one estimate has moved higher compared to no negative revisions, helping the consensus estimate increase 5.64%.

Favorable Zacks Rank

Thanks to promising estimate revisions, M/I Homes currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

While strong estimate revisions for M/I Homes have attracted decent investments and pushed the stock 19.5% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.


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