Is M/I Homes (MHO) a Great Value Stock Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is M/I Homes (MHO). MHO is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 6.91, which compares to its industry's average of 11.02. MHO's Forward P/E has been as high as 13.34 and as low as 1.98, with a median of 8.36, all within the past year.
Another notable valuation metric for MHO is its P/B ratio of 1.11. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.27. Over the past year, MHO's P/B has been as high as 1.33 and as low as 0.27, with a median of 1.09.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. 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 0.48. This compares to its industry's average P/S of 0.82.
Finally, investors should note that MHO has a P/CF ratio of 6.75. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. MHO's current P/CF looks attractive when compared to its industry's average P/CF of 8.76. MHO's P/CF has been as high as 9.85 and as low as 1.96, with a median of 7.17, 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.
Click to get this free report
MI Homes, Inc. (MHO): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.