Are Investors Undervaluing M/I Homes (MHO) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...
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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is M/I Homes (MHO). MHO is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 3.90. This compares to its industry's average Forward P/E of 6.86. Over the last 12 months, MHO's Forward P/E has been as high as 9.28 and as low as 3.90, with a median of 6.40.
We should also highlight that MHO has a P/B ratio of 1.15. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. MHO's current P/B looks attractive when compared to its industry's average P/B of 1.51. MHO's P/B has been as high as 1.59 and as low as 0.99, with a median of 1.22, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 0.47. This compares to its industry's average P/S of 0.7.
Finally, our model also underscores that MHO has a P/CF ratio of 4.76. 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 7.91. MHO's P/CF has been as high as 7.05 and as low as 4.48, with a median of 5.79, all within the past year.
These are only a few of the key metrics included in M/I Homes's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MHO looks like an impressive value stock at the moment.
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