This Analyst Just Made An Incredible Upgrade To Their M/I Homes, Inc. (NYSE:MHO) Earnings Forecasts

M/I Homes, Inc. (NYSE:MHO) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's statutory forecasts. The analyst greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The stock price has risen 9.1% to US$99.53 over the past week, suggesting investors are becoming more optimistic. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

Following this upgrade, M/I Homes' lone analyst are forecasting 2023 revenues to be US$4.3b, approximately in line with the last 12 months. Statutory earnings per share are supposed to dip 2.8% to US$16.88 in the same period. Before this latest update, the analyst had been forecasting revenues of US$3.7b and earnings per share (EPS) of US$12.58 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for M/I Homes

Although the analyst has upgraded their earnings estimates, there was no change to the consensus price target of US$93.50, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic M/I Homes analyst has a price target of US$116 per share, while the most pessimistic values it at US$71.00. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that M/I Homes' revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 0.4% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 2.2% annually. Factoring in the forecast slowdown in growth, it seems obvious that M/I Homes is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us from these new estimates is that the analyst upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. The lack of change in the price target is puzzling, but with a serious upgrade to this year's earnings expectations, it might be time to take another look at M/I Homes.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.