Back to top

Image: Bigstock

Are Investors Undervaluing MI Homes (MHO) Right Now?

Read MoreHide Full Article

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

MI Homes (MHO - Free Report) is a stock many investors are watching right now. MHO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 2.79, while its industry has an average P/E of 4.66. MHO's Forward P/E has been as high as 6.32 and as low as 2.48, with a median of 4.03, all within the past year.

We should also highlight that MHO has a P/B ratio of 0.78. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.13. Over the past 12 months, MHO's P/B has been as high as 1.52 and as low as 0.68, with a median of 1.11.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MHO has a P/S ratio of 0.35. This compares to its industry's average P/S of 0.61.

Finally, our model also underscores that MHO has a P/CF ratio of 3.24. 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. This stock's P/CF looks attractive against its industry's average P/CF of 4.96. Within the past 12 months, MHO's P/CF has been as high as 6.76 and as low as 2.84, with a median of 4.63.

Value investors will likely look at more than just these metrics, but the above data helps show that MI Homes is likely undervalued currently. And when considering the strength of its earnings outlook, MHO sticks out at as one of the market's strongest value stocks.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


MI Homes, Inc. (MHO) - free report >>

Published in