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M/I Homes, Inc. (NYSE:MHO), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$138 and falling to the lows of US$109. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether M/I Homes' current trading price of US$109 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at M/I Homes’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is M/I Homes Still Cheap?
According to our valuation model, M/I Homes seems to be fairly priced at around 1.95% above our intrinsic value, which means if you buy M/I Homes today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $107.02, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that M/I Homes’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
View our latest analysis for M/I Homes
What does the future of M/I Homes look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -4.5% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for M/I Homes. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Currently, MHO appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.