A Look at M/I Homes’s Valuation Following Improved Credit Terms and Expanded Facility

M/I Homes (MHO) just announced a major update to its financing arrangements, catching the attention of investors keeping an eye on the company’s growth strategy. On September 18, the company amended its unsecured revolving credit facility, increasing the lender commitments to $900 million from $650 million and extending the maturity to 2030. What might excite those on the sidelines is not just the larger credit line, but also the lower interest margins and fees. These moves can free up more capital for M/I Homes as it looks for ways to fuel future expansion. This credit upgrade comes after a year where M/I Homes’ stock has seen both advances and setbacks. The share price rallied in the past three months, gaining roughly 29% during that period, even though the year-to-date gains have been milder and the annual return is down 14%. Longer term, the three- and five-year returns suggest substantial appreciation for patient investors. All of this sets the stage for a company that has more financial flexibility now than earlier this year, just as the market’s perception of risk and return is shifting. After this burst of momentum and sharper borrowing terms, the real question for investors is whether there is a bargain still to be had or if the market is already pricing in brighter days ahead for M/I Homes.

Most Popular Narrative: 10% Undervalued

According to the most widely followed narrative, M/I Homes is considered to be 10% undervalued relative to its projected fair value, based on analysts' expectations of future earnings and operational performance.

The company is strategically expanding its community count, up 5% year-over-year and planning continued growth in high-demand regions (Midwest, Southeast, and especially Southern markets like Texas and Florida). Demographic trends, such as millennial and Gen Z buyers and household formation, and migration patterns support long-term demand. This positions M/I Homes for potential future revenue growth. Despite short-term headwinds from higher rates, the persistent U.S. single-family home undersupply relative to demographic demand means many buyers are still on the sidelines. This suggests there is substantial pent-up demand that could materialize as macro conditions improve, setting the stage for possible future sales and revenue acceleration.

Curious why analysts are betting on M/I Homes’ next phase? The narrative hinges on critical forecasts for revenue, margins, and market demand, numbers most investors haven’t seen yet. What assumptions fuel this fair value? Uncover the surprising valuation math and learn what might move the stock next.

Result: Fair Value of $162 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising interest rates and softer new contract activity could weigh on M/I Homes’ outlook, which may test the durability of the bullish narrative.

Find out about the key risks to this M/I Homes narrative.

Another View: SWS DCF Model Offers a Cautionary Signal

While the earlier approach sees M/I Homes as undervalued, our DCF model presents a more conservative perspective and suggests the shares may be priced above their fair value. Which view will prove more accurate as expectations shift?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out M/I Homes for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own M/I Homes Narrative

If you have a different perspective or want to examine the details firsthand, you can quickly build your own view using our tools: Do it your way.

A great starting point for your M/I Homes research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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