M/I HOMES, INC. (MHO): what the price assumes

In the published model solve dated 2026-Q2, anchored at $150.72, M/I HOMES, INC. (MHO) is priced for -4.0% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/MHO

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 10.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~4.3pp.

How unusual the bet is: within-range

Valuation X-Ray

The price is supported by asset-based and relative-multiple value, while earnings-power/growth-DCF land below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Relative Families that call it expensive: Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=16)

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• M/I Homes is a homebuilder priced for decline: at roughly seven times operating income, the market is paying for the business to shrink, and the book value behind each share rose to about $124.75 in the first quarter against a $149.03 price, so the premium to net worth is modest.
• The biggest risk is the housing cycle itself, which the company expects to stay against it: management's own outlook calls for "housing affordability challenges, elevated mortgage interest rates and tepid homebuyer sentiment to continue to put pressure on homebuyer demand" in 2026.
• Watch margins and backlog: first-quarter homebuilding gross margin fell from 23.4% to 19.3% as incentives and lot costs bit, and backlog units dropped 21%, so the order book and the margin trend are the two numbers that decide whether the trough deepens.

Bull Case

Look at where the price sits against the methods, because the pattern is unusual for a stock that has held up reasonably well. The asset-value and peer-multiple lenses land at or above $149.03; only the earnings-power and growth methods say expensive. That is the fingerprint of a value name, not a growth bet. The market is paying about seven times operating income, a multiple that inverts to a small annual DECLINE in operating profit over the next five years. In other words, the price already assumes the business gets smaller. Anything better than slow shrinkage is upside the price is not paying for.

The balance sheet is what makes a homebuilder priced for decline interesting. Shareholders' equity reached a record $3.19 billion in the first quarter, and book value per share rose to about $124.75. A buyer at $149.03 is paying only a slight premium to stated net worth for a company that is still solidly profitable, generated double-digit return on equity over the trailing year, and funds its operations from "proceeds from home deliveries, the sale of mortgage loans, the sale of mortgage servicing rights, excess cash balances" rather than from stretched leverage. Homebuilders are valued on book in part because the inventory IS the book: land and houses that can be sold. When that book is growing and the equity is at a record, the downside has a real floor under it.

The operational base is steady even in a soft market. First-quarter new contracts rose 3% to 2,350 homes even as deliveries dipped, and management is guiding to roughly 5% community-count growth with disciplined land investment, which is how a builder positions for the next up-cycle without overcommitting capital in the down one. The financial-services arm, which originates loans and provides title services tied to the homes the company sells, adds a second profit stream that travels with volume. The bull case does not require a housing boom. It requires only that a conservatively financed builder, trading near book, keeps building and selling homes at a profit while the market prices it as if it will not.

Bear Case

The cheapness is real, and so is the reason for it. The earnings are heading the wrong way, and the first quarter showed how fast. Pre-tax income fell 39% year over year, EPS dropped from $3.98 to $2.55, and homebuilding gross margin compressed from 23.4% to 19.3% as the company leaned on buyer incentives and absorbed higher lot costs. A stock can look inexpensive on trailing book and last year's earnings while the forward earnings power quietly erodes underneath it. That is the trap the bear is watching: the multiple is low because the market suspects the earnings denominator is still falling.

Management is not arguing otherwise. Its own outlook expects "housing affordability challenges, elevated mortgage interest rates and tepid homebuyer sentiment to continue to put pressure on homebuyer demand" through 2026. The leading indicators agree: backlog units fell 21% and backlog sales value dropped 23%, which means the revenue and margin already in the pipeline are thinner than a year ago. A builder sells what it has under contract, so a shrinking backlog at falling prices is a fairly direct forecast of softer quarters ahead. The 2025 results carried an aggregate $47.7 million charge that included land-deposit write-offs and inventory impairments, the accounting evidence that some land bought for a stronger market is worth less in this one.

The financing structure adds a quieter risk. M/I Financial relies on mortgage repurchase facilities to fund the loans it originates, and the 10-K notes these "will expire on October 20, 2026" with the caveat that an inability to renew or replace them would matter. In a benign credit environment this is routine; in a stressed one it is the kind of dependency that tightens exactly when demand is weakest. The bear case is not that M/I Homes is a bad company or carries reckless leverage. It is that a builder priced near book in a cycle its own management expects to stay difficult can see book value itself stop growing, and the value-supported floor is only a floor as long as the assets behind it hold their marks.

Valuation

The price is making a quiet bet, and it is a bet on decline. At about seven times operating income, $149.03 inverts to roughly a 3 to 4% annual contraction in operating profit sustained over five years. The market is not asking M/I Homes to grow; it is pricing in a managed shrinkage. That framing matters, because it sets a low bar: the company clears it by simply not falling as fast as the price assumes.

The methods divide along the line you would expect for a cyclical trading near book. The asset-value lenses, anchored on book value per share of about $124.75 and a trailing return on equity in the low teens, land at or just above the price. The peer-multiple lens, on a sector earnings multiple near eighteen times, also reaches it. The earnings-power and cash-flow methods say expensive, because they capitalize a normalized or trailing free-cash figure that is depressed by the current down-cycle and by heavy land spending. The disagreement is not noise. It is two honest readings of the same business: the asset lens values the land and houses on the balance sheet, while the cash-flow lens values the thin free cash a builder throws off while it is reinvesting in inventory. For a homebuilder near a cyclical low, the asset lens is usually the more informative one.

Solvency is the quiet strength under the whole picture. The company carries no meaningful net debt against its operations, funds itself largely from home deliveries and loan sales, and reached a record $3.19 billion of equity in the first quarter. The share count has been falling, evidence of buybacks rather than dilution. The one financing dependency worth naming is the mortgage warehouse facilities at the financial-services unit, which the filing notes come up for renewal in October 2026. The decisive question is not whether the balance sheet can survive the down-cycle; it plainly can. It is whether book value keeps compounding through it. As long as the land marks hold and the company keeps building at a profit, a price near book on a builder priced for decline is paying very little for the next recovery. If the marks slip and backlog keeps shrinking, the floor moves down with the book.

Catalysts

M/I Homes reported first-quarter 2026 results on April 22, and the print captured the cycle in miniature. EPS of $2.55 just edged the $2.53 estimate, but it was down from $3.98 a year earlier, revenue of $920.7 million fell about 6% and missed estimates, and pre-tax income dropped 39%. The margin was the headline: homebuilding gross margin fell from 23.4% to 19.3% as the company used incentives to move homes and absorbed higher lot costs. Underneath, new contracts rose 3% to 2,350 homes while deliveries dipped 3%, a mixed demand signal in a market the company expects to stay soft.

The forward setup is a backlog and rate story. Backlog units fell 21% and backlog value 23%, which thins the visible pipeline into the next several quarters, and management guided to roughly 5% community-count growth with disciplined land spending as it positions for an eventual turn. The single most important external variable is the path of mortgage rates: management explicitly flagged elevated rates and affordability as the demand drags for 2026, so any meaningful easing would be the catalyst that re-rates the order book, while continued high rates extend the trough. The mortgage warehouse facilities at the financial-services unit also come up for renewal in October 2026, a routine but watch-worthy item.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• TOL (Toll Brothers, Inc.)
• FY2025 10-K: …in home buyers canceling their agreements of sale with us, which could have an adverse effect on our business and results of operations. The home building industry is highly competitive, and, if other home builders are more successful or offer better value to our customers, our business could decline. We operate in a…
• FY2025 10-K: …subsidiary funds its commitments through a combination of its own capital, capital provided from us, its loan facility, and the sale of mortgage loans to various investors. Our mortgage subsidiary has commitments from investors to acquire all $382.1 million of these locked-in loans and receivables. Our home buyers…
• TMHC (Taylor Morrison Home Corp)
• FY2025 10-K: …strategies, and results. Competition among residential homebuilders of all sizes is based on several interrelated factors, including location, reputation, amenities, floor plans, design, quality, and price. We believe that we compare favorably to other homebuilders in the markets in which we operate. TAYLOR MORRISON…
• FY2025 10-K: …or reduce the value of existing homes below the related mortgage loan balance, which could potentially increase the supply of existing homes and have a negative impact on demand and our results of operations. Furthermore, a material decline in oil and gas prices may increase the risk of significant deflation and its…
• TPH (Tri Pointe Homes, Inc.)
• FY2025 10-K: …and regulatory approvals, as well as other customary closing conditions, in the second quarter of 2026. See Part I, Item 1 "Business" and Item 1A, "Risk Factors" above. In the 2025 fiscal year, we achieved home sales revenue of $3.4 billion, and our homebuilding gross margin percentage was 21.0%, while total sales…
• FY2025 10-K: …percentage was 25.2% for the year ended December 31, 2025 compared to 26.8% for the prior year. Adjusted homebuilding gross margin is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that leverage and non-cash charges have on homebuilding gross margin and permits…
• CCS (Century Communities, Inc.)
• FY2025 10-K: …affect our business, operating results, and financial condition, as well as our stock price, despite their accuracy or inaccuracy. We face significant competition in the homebuilding industry and may be unable to compete effectively. The homebuilding industry is highly competitive, with relatively low barriers to…
• FY2025 10-K: …$19.4 million in income before income tax expense, which included the sale of one multi-family rental property, reflected in other income (expense), net on our consolidated statements of operations. Corporate During the year ended December 31, 2025, our Corporate segment generated a loss of $126.5 million, as…
• PHM (PULTEGROUP, INC.)
• FY2025 10-K: …to exercise our option, which reduces our financial risks associated with long-term land holdings. The remaining purchase price under our land option agreements totaled $10.0 billion at December 31, 2025. 26 Homebuilding Segment Operations Our Homebuilding operations represent our core business. Homebuilding offers a…
• FY2025 10-K: We believe that national publicly-traded builders have a competitive advantage over local builders through their ability to: access more reliable and lower cost financing through the capital markets; control and entitle large land positions; gain better access to scarce labor resources; and achieve greater geographic…
• KBH (KB HOME)
• FY2025 10-K: Notes to 32 Consolidated Financial Statements in this report. As a percentage of homebuilding revenues, our homebuilding operating income for 2025 decreased 290 basis points year over year to 8.2% , mainly due to a lower housing gross profit margin and higher selling, general and administrative expenses as a…
• FY2025 10-K: …segment. Our homebuilding operating segments have been aggregated into four homebuilding reporting segments, based primarily on similarities in economic and geographic characteristics, product types, regulatory environments, methods used to sell and construct homes and land acquisition characteristics. Our CODM,…
• DFH (DREAM FINDERS HOMES, INC.)
• FY2025 10-K: …market share expansion or lead to pricing pressures on our homes that may adversely impact our margins and revenues. Our competitors may independently develop land and construct housing units that are superior or substantially similar to our products. Because our competitors are or may be significantly larger, have a…
• FY2025 10-K: …tax expense during the year ended December 31, 2024. 81 Table of Contents 9. Segment Reporting The Company primarily operates in the homebuilding business and is organized and reported mainly by region. The Company's four reportable segments consist of the three homebuilding segments-the Southeast, Mid-Atlantic and…
• GRBK (Green Brick Partners, Inc.)
• FY2025 10-K: …which to build homes or make such acquisitions more expensive, hinder our market share expansion, and lead to pricing pressures on our homes that may adversely impact our revenues and margins. Our competitors may independently develop land and construct housing units that are superior or substantially similar to our…
• FY2025 10-K: …housing products, class of homebuyer, regulatory environments, and methods used to construct and sell homes. Corporate operations are reported as a non-operating segment and include activities which support the Company's builder operations, land development, title and mortgage operations through the centralization of…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.