Value
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.4 |
| P/S | 9.7 |
| EV/EBITDA | 6.5 |
| Fwd P/E | 9.3 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 10.2x
- ▸PEG: 0.41
- ▸Attractively valued
MHO · Why this verdict
Why M/I Homes (MHO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
M/I Homes is priced attractively at under 10x forward earnings, but two of the last four quarters missed consensus estimates and one came in flat, with an average quarterly earnings surprise of -11.8% across all four periods — combined with free cash flow covering only 48% of reported net income and a quality score at the minimum acceptable threshold, the risk profile does not support a new position.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business quality score sits at the minimum acceptable threshold, and the stock has already reached near-term resistance with essentially no positive upside remaining — a combination that removes any margin of safety for new capital. Warnings | If quality improves, the composite quality score rises sustainably above 5.0 and the stock builds measurable upside beyond current resistance. | →Stable |
| CounterMomentum remains positive — RSI at 64, MACD bullish, stock above the 200-day moving average — suggesting the market is not pricing in fundamental deterioration at current levels. | ||
At a forward P/E of 9.1x and a PEG of 0.57, the stock is priced for muted expectations, offering a valuation floor that could limit downside if fundamentals stabilize. Valuation breakdown | Over 12 months, forward earnings estimates stabilize or rise, sustaining a forward P/E below 10x while the business avoids further revenue contraction. | →Stable |
| CounterRevenue declined 6% in the most recent period and the stock has essentially reached near-term resistance with almost no headroom remaining; a cheap multiple offers little protection if the earnings base continues to shrink. | ||
Two of the last four quarters missed consensus estimates and one came in flat, with the average quarterly earnings surprise across all four periods at -11.8% and one quarter missing by more than 38%; only the most recent quarter delivered a beat. Earnings | The earnings trend reverses if the next two consecutive quarters both come in above consensus estimates. | ↓Deteriorating |
| CounterThe most recent quarter broke the pattern with a beat, and the prior shortfalls may reflect a transient period of cost pressure or demand softness rather than a structural impairment of the earnings trajectory. | ||
Free cash flow is converting at only 48% of reported net income — a level flagged as a quality concern — suggesting that a meaningful portion of reported earnings is not flowing through to actual cash. Quality breakdown | Free cash flow conversion rises above 80% of net income for 2 consecutive quarters, validating the earnings quality. | →Stable |
| CounterIn residential construction, free cash flow can lag reported earnings during periods of active inventory build; a normalization of housing activity could release working capital and improve conversion meaningfully. | ||
The business quality score sits at the minimum acceptable threshold, and the stock has already reached near-term resistance with essentially no positive upside remaining — a combination that removes any margin of safety for new capital.
→StableWarnings
- Expectation
- If quality improves, the composite quality score rises sustainably above 5.0 and the stock builds measurable upside beyond current resistance.
CounterMomentum remains positive — RSI at 64, MACD bullish, stock above the 200-day moving average — suggesting the market is not pricing in fundamental deterioration at current levels.
At a forward P/E of 9.1x and a PEG of 0.57, the stock is priced for muted expectations, offering a valuation floor that could limit downside if fundamentals stabilize.
→StableValuation breakdown
- Expectation
- Over 12 months, forward earnings estimates stabilize or rise, sustaining a forward P/E below 10x while the business avoids further revenue contraction.
CounterRevenue declined 6% in the most recent period and the stock has essentially reached near-term resistance with almost no headroom remaining; a cheap multiple offers little protection if the earnings base continues to shrink.
Two of the last four quarters missed consensus estimates and one came in flat, with the average quarterly earnings surprise across all four periods at -11.8% and one quarter missing by more than 38%; only the most recent quarter delivered a beat.
↓DeterioratingEarnings
- Expectation
- The earnings trend reverses if the next two consecutive quarters both come in above consensus estimates.
CounterThe most recent quarter broke the pattern with a beat, and the prior shortfalls may reflect a transient period of cost pressure or demand softness rather than a structural impairment of the earnings trajectory.
Free cash flow is converting at only 48% of reported net income — a level flagged as a quality concern — suggesting that a meaningful portion of reported earnings is not flowing through to actual cash.
→StableQuality breakdown
- Expectation
- Free cash flow conversion rises above 80% of net income for 2 consecutive quarters, validating the earnings quality.
CounterIn residential construction, free cash flow can lag reported earnings during periods of active inventory build; a normalization of housing activity could release working capital and improve conversion meaningfully.
Per-dimension breakdown
Quality
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.4 |
| ROA | 3.8 |
| Gross margin | 0.2 |
| Op margin | 3.7 |
| Net margin | 3.7 |
| Current ratio | 5.0 |
| FCF quality | 2.2 |
| Moat | 3.9 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: 27% FCF/NI
- ▸No competitive moat
Growth
3.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.4 |
| EPS growth | 7.0 |
- ▸Declining revenue: -8%
Momentum
3.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.1 |
| Price target | 6.9 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (3.0) — signal dampened
Insider
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Notable insider selling — $7,712,824 (0.206% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.3 |
| quality rank | 5.0 |
| growth rank | 2.9 |
Technical
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.9 |
| support resistance | 5.7 |
| 52w position | 8.4 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.6 |
| days to cover | 5.9 |
| volatility | 4.6 |
| put call | 10.0 |
| implied vol | 5.3 |
| max pain risk | 3.0 |
| beta | 4.6 |
| debt equity | 8.8 |
- ▸Above max pain $115
Catalyst
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:70d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.1<4.5
- ASYMMETRY:-0.6=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.58
Upside
-3.6%
Downside
6.3%
Sizing output
AVOID
SetupRange Bound — RSI 52 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — Beta 1.61>1.3, MCap $3.7B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 3.1<4.5 outcome against Value at 7.9 and asymmetric R:R of -0.58.
The strongest dimensions are Value at 7.9, Sentiment at 6.1, and Risk (lower is worse) at 6.1; the weakest are Momentum at 3.1, Catalyst at 3.3, and Quality at 3.6. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -0.58 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Homebuilder Valuation Support
Trip ifForward earnings estimates are cut by more than 20% from current consensus in any single analyst revision cycle.
- P2Earnings Miss Pattern
Trip ifEPS surprise exceeds 3% for 2 consecutive quarters, signaling a reversal of the miss pattern.
- P3Cash Conversion Shortfall
Trip ifFree cash flow rises above 80% of net income for 2 consecutive quarters.
- P4Quality Floor No Entry Room
Trip ifBusiness quality score rises above 5.0 and the stock builds more than 10% upside headroom above current levels for 4 consecutive weeks.