M/I Homes
M/I Homes
MHO
$0.85
0.5%
37%
IBD Stock Analysis
- Just below 173.69 handle buy point
- Revenue growth slowly accelerating
Industry Group Ranking
Emerging Pattern
Consolidation
* Not real-time data. All data shown was captured at
11:19AM EDT on
09/30/2024.
M/I Homes (MHO) is Monday’s IBD Stock Of The Day, as the homebuilder traded near a buy point in the midst of a nearly 50% advance from recent lows. MHO shares angled up a fraction Monday.
Ohio-based M/I Homes is one the top U.S. homebuilders. with operations across the Midwest, Florida, Texas, North Carolina and Tennessee.
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M/I Homes reported better-than-expected second-quarter earnings and revenue at the end of July. Analysts forecast Q3 EPS growing 2.5% with sales increasing around 8%. The company is expected to report third-quarter financials in late October.
For the full year, analyst consensus has earnings jumping 22% to $19.76 per share. Profit is expected to hit $22.99 per share in 2026, which would represent a 41% increase compared to 2023 levels.
In late August, Seaport Research initiated coverage of M/I Homes with a neutral rating and no price target. The analyst wrote that the builder has grown from its Midwest roots into Texas, Florida and the Carolinas. Those new areas now account for around 60% of its sales. The firm believes MHO’s current margin success could raise cyclical concerns.
This S&P 500 Stock Falls On Earnings Despite Expected Tailwind From Fed Rate Cuts
The Fed Rate Cut And Housing
The Federal Reserve recently cut rates for the first time since the Covid crisis with Fed Chief Jerome Powell signaling more easing along with an economic soft landing.
For 2025, policymakers see another 100 basis points of Fed rate cuts, bringing the key rate down to a 3.25%-3.5% range.
Homebuilders for more than a year have said that housing affordability has been tested by interest rate movements. Many homebuilders have turned to incentives to keep home prices down and drum up demand amid increased interest rates. However, mortgage rates have fallen considerably over the past few months along with Treasury yields in anticipation of Fed rate cuts. That boosts affordability, so potential buyers may need fewer incentives to seal the deal, leading to higher profits for M/I Homes and others.
M/I Homes Stock Performance
MHO shares edged up slightly to 170.15 during market trade on Monday. The stock is looking to end September with a more-than-6% increase after declining 4.5% in August. M/I Homes stock had a massive July, soaring 36.6%.
MHO has a 173.69 buy point from a base handle. The entry is fractionally below the top of the base at 173.86, which was an all-time high.
The current base formed right on top of a six-month consolidation, according to MarketSurge chart analysis.
The stock has rallied more than 23% in 2024 and rocketed 47% higher since hitting a recent low of 115.29 on July 5.
Overall, the IBD-tracked Building-Residential/Commercial industry group surged 60% in 2023. This year, the 22 stocks in the group have collectively advanced 36.4%.
New Home Sales Tops Views As Mortgage Rates Ease, KB Home Falls
KB Home (KBH) traded about 4% below an official 88.31 entry on Monday. Shares fell last week on mixed results.
S&P 500 stock Lennar (LEN) has retreated slightly since hitting all-time highs on Sept. 19, amid a 24% gain in 2024. The S&P 500 stock was last below its 200-day moving average in early July and has rallied 30% since then.
Meanwhile, Toll Brothers (TOL) and D.R. Horton (DHI) are also both trading around all-time highs. Toll Brothers hit 156 on Friday while DHI shares on Sept. 19 had an intraday high of 199.85.
MHO stock has a robust 94 Composite Rating out of a best-possible 99. M/I Homes also has a strong 95 Relative Strength Rating and a 98 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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