Has the M/I Homes Pullback Created a New Opportunity for Investors in 2025?

• Wondering if M/I Homes is a hidden gem or simply trading at fair value? Let's take a closer look at what's driving the buzz around this stock.
• After topping out, the share price has pulled back recently, falling 3.7% in the last week and 11.3% over the past month. However, it still boasts impressive gains of 178.8% over three years.
• Recent headlines have focused on shifting trends in the housing market and investor sentiment toward homebuilders. Notably, changes in mortgage rates and evolving demand for new homes have both contributed to the stock's volatility.
• M/I Homes currently scores a 4 out of 6 on our valuation checks, suggesting there might be value on the table. The best way to measure a company's true worth might just surprise you, so stick around as we unpack different approaches to valuation.

Find out why M/I Homes's -20.3% return over the last year is lagging behind its peers.

Approach 1: M/I Homes Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a company is truly worth by projecting its future cash flows and then discounting those amounts back to their value today. This approach helps investors see whether a stock's current price is reasonable compared to its long-term fundamentals.

For M/I Homes, the most recent annual Free Cash Flow sits at $250.6 million. Analysts expect near-term cash flows to shrink, with the projection for 2026 down to $144.3 million. Over a ten-year horizon, Simply Wall St continues the forecast by extrapolating the trends and projects free cash flow in 2035 at $63.9 million.

All these future cash flows are discounted back to the present using a standard methodology and this yields an intrinsic value of $38.11 per share. With the current market price trading at a premium, the DCF assessment suggests that M/I Homes is approximately 226.7% overvalued relative to its calculated fair value.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests M/I Homes may be overvalued by 226.7%. Discover 919 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for M/I Homes.

Approach 2: M/I Homes Price vs Earnings

For profitable companies like M/I Homes, the Price-to-Earnings (PE) ratio is a well-established tool for gauging valuation. This ratio captures how much investors are willing to pay for each dollar of current earnings. It serves as a useful way to compare profitability across companies in the same industry.

The appropriate PE ratio for a stock depends on several factors, including growth prospects and risk. Companies with strong growth outlooks often have higher PE ratios, while those facing more risk or cyclical earnings might trade at a discount.

Currently, M/I Homes is trading at a PE ratio of 6.9x. This is noticeably below the industry average of 11.2x and the peer average of 11.4x, which may suggest the market is skeptical about the company’s future growth or perceives elevated risks.

To provide a more tailored benchmark, Simply Wall St’s “Fair Ratio” assesses what the PE should be for M/I Homes by considering not just industry averages or peer groupings, but also the company’s own growth projections, risk profile, profit margins, and market capitalization. This approach offers a more nuanced, company-specific view than traditional comparables. The determined Fair Ratio for M/I Homes stands at 11.5x.

Comparing M/I Homes’ actual PE of 6.9x to its Fair Ratio of 11.5x suggests the stock is undervalued based on current earnings and fundamentals.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1422 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your M/I Homes Narrative

Earlier, we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple, powerful tool for connecting a company’s story with your financial outlook to arrive at a personal fair value.

A Narrative lets you set your own view on where M/I Homes is heading by combining your perspective, such as expected revenue growth, margin trends and long-term risks, with future estimates. This transforms dry numbers into a forward-looking story. Narratives bridge the gap between what a company does and what you think it is worth, allowing you to see how your assumptions compare to market sentiment or the opinions of other investors.

On Simply Wall St’s Community page, you can easily create and update your own Narrative as new earnings or news break, or explore those published by millions of other users. This dynamic approach lets you track how changes in your Narrative shift the company’s calculated fair value and signal whether you might want to buy or sell based on the latest information.

For example, in the case of M/I Homes, one investor might see robust demand and forecast a fair value as high as $185, while another, more cautious about rising risks and margins, may estimate a fair value near $150.

Do you think there's more to the story for M/I Homes? Head over to our Community to see what others are saying!

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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