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.

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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.

Are you a potential investor? If you’ve been keeping tabs on MHO for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on MHO should the price fluctuate below its true value.

If you want to dive deeper into M/I Homes, you'd also look into what risks it is currently facing. When we did our research, we found 2 warning signs for M/I Homes (1 shouldn't be ignored!) that we believe deserve your full attention.

If you are no longer interested in M/I Homes, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.