M/I Home (M/I) – still not time to go in

M/I is a small-sized US homebuilder operating in 9 states.

In 2022, M/I was a much bigger company compared to that in 2005. Its 2022 revenue was 3 times bigger while its Net Income was almost 5 times larger. Unfortunately, its capital efficiency as measured by the gross profitability did not improve. I would also rate M/I's financial position as poor.

About 1/3 of its revenue growth was driven by growth in house prices. As such, I valued M/I as a cyclical company, but with a growth path capped at the US long-term GDP growth rate of 5%.

I carried out a valuation of M/I at the end of Jul 2023 different gross profit margin assumptions. It showed that there is not enough margin of safety even under the most optimistic scenario.

M/I price was then USD 96 per share. Today the share price has dropped by 17 % to USD 80 per share. If you look at the infographic, there is still not enough margin of safety.

For more insights into US companies go to “My 39 Non-Bursa stocks that can make money” https://www.i4value.asia/2021/03/are-these-outstanding-stocks-what-to.html#more

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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