M/I Homes: A Missed Quarter or a Buying Opportunity?

The housing market is like a rollercoaster these days—up one minute, down the next. Take M/I Homes (NYSE:MHO), which just reported a Q1 2025 earnings miss that sent its stock reeling. GAAP EPS came in at $3.98, $0.18 below estimates, while revenue of $976 million missed by a staggering $144 million. But here’s the kicker: this isn’t the end of the story. Let’s dig deeper.

The Disappointing Q1: A Speed Bump or a Pothole?

M/I’s Q1 results were a letdown. Revenue fell 7% year-over-year, with homes delivered dropping 8% to 1,976 units. New contracts also slumped 10%, and cancellation rates ticked up to 10%—all signs of a slowing market. Investors weren’t happy, sending shares down 5% post-earnings. But before you bail, consider this:

2024: A Year of Records, Despite 2025’s Woes

Let’s not forget that 2024 was a monster year for M/I. Revenue hit $4.5 billion (+12%), net income surged 27%, and homes delivered hit 9,055 units—a record. Even in Q4 alone, revenue jumped 24%, and pre-tax margins held firm at 14.3%. The company’s financial fortress is undeniable:
- $3 billion in shareholders’ equity (up 17% from 2023).
- $776 million in cash, zero debt, and a -5% net debt-to-capital ratio—one of the strongest in the industry.
- They bought back $176 million of their own stock in 2024, proving confidence in their value.

Why the Q1 Slump? Blame the Mortgage Market

CEO Mike Wiener laid it out: rising mortgage rates and “choppy” consumer sentiment hit demand. Mortgage rates spiked to 7.5% in early 2025, pricing some buyers out of the market. But here’s the silver lining: M/I’s strategy is laser-focused on price-pace balancing and selective land investments, which kept gross margins at 25.9%—a robust number in a tough quarter.

The Bull Case: Demographics and Scarcity

M/I isn’t just a housing play—it’s a bet on demographics. The U.S. needs millions of new homes to keep up with population growth, and M/I’s land bank is ready. They control 52,156 lots—a 5.5-year supply—and plan to expand communities to 226 in 2025. Meanwhile, their mortgage division is a hidden gem: Q4 pre-tax income there hit $10 million, up 45% year-over-year, helping offset housing headwinds.

The Bottom Line: Buy the Dip?

Here’s why I’m leaning bullish long-term:
1. Financial strength: No debt, fat cash reserves, and a book value per share of $112—way above its current stock price.
2. Margin resilience: Even in Q1, pre-tax margins held at 15%, and ROE stayed strong at 19%.
3. Market tailwinds: The housing supply is way below demand, and millennials/Gen Z are just starting to buy homes.

Analysts are forecasting $4.16 EPS for Q1 2025—still below last year’s $4.78, but the trend is stabilizing. With shares now down to around $128, this could be a chance to buy a quality name at a discount.

Final Verdict: Hold for the Long Game

M/I Homes’ Q1 stumble is painful, but it’s not a death knell. The company is sitting on a cash mountain, executing a disciplined land strategy, and betting on a housing market that’s fundamentally undersupplied. If mortgage rates ease—and history shows they will—M/I’s backlog and pricing power could snap back fast.

Investors should focus on the big picture: MHO is a $3 billion equity fortress with a management team that’s mastered margin discipline. This stock isn’t dead—it’s just catching its breath. If you’re in for the long haul, this dip could be a gift.

Final Call: Hold for now, but keep an eye on Q2. If mortgage rates drop or cancellations fall, buy here. The fundamentals are still screaming BULLISH.

Disclosure: This analysis is based on public data. Always do your own research before investing.