M/I Homes Q1 Earnings: Can This Housing Stock Deliver in a Tough Market?

Here we go, folks! M/I Homes (MHO) is set to report Q1 earnings on April 23, and the stakes are high. This is a company that’s been navigating some of the toughest headwinds in housing—soaring mortgage rates, affordability challenges, and a slowing economy. But with a 5.5-year land supply and a $2.9 billion equity war chest, management is betting on long-term growth. Let’s dig into the numbers to see if this stock can turn things around.

The Key Metrics: Revenue Up, Earnings Down—What’s the Deal?

Analysts are expecting a 13% year-over-year drop in EPS to $4.16, but here’s the twist: revenue is projected to jump 7.1% to $1.12 billion. This is a classic “top-line growth, bottom-line pressure” scenario. The housing sector’s been squeezed by margin compression as costs rise faster than prices. M/I’s homebuilding revenue is up 7%, and average home prices are inching higher ($489K vs. $471K in 2024), but gross margins are still under threat.

Backlog Blues: A Red Flag or a Speed Bump?

The real concern here is the backlog. M/I’s homes in backlog dropped 14% to 2,910 units, and the aggregate sales value of those homes fell 10.6% to $1.59 billion. That’s a sign of weaker demand, but there’s a silver lining: new contracts rose slightly to 2,599. So, while the backlog is shrinking, new buyers are still coming in—just not fast enough to keep up with deliveries. This could mean inventory management is getting tighter, which might hurt future revenue growth if not addressed.

The Mortgage Buy-Down Gamble

Management is leaning hard on mortgage buy-down programs to make homes more affordable. These programs reduce monthly payments for buyers by subsidizing mortgage rates, but they come at a cost to margins. While this strategy can boost sales in the short term, it’s a double-edged sword. The question is: Can M/I maintain its 26.6% gross margin (a record high in 2024) while subsidizing rates? Analysts are already bracing for margin compression, and the stock has reacted—dropping 11% in a month versus the S&P’s 6% decline.

The Balance Sheet: A Fortress or a Liability?

M/I’s land supply is a 23,800 owned lots plus 28,400 controlled, which gives it a 5.5-year runway. That’s a huge advantage in a market where land availability is scarce. But with interest rates stuck near 5%, buyers are holding back. The company’s equity of $2.9 billion is strong, but the trailing P/E of just 5.4 suggests the market isn’t buying its long-term story.

The Bottom Line: Buy the Dip or Bail?

Here’s the deal: M/I has the financial strength to weather this storm, with revenue growth proving sticky even as margins tighten. The $4.16 EPS estimate is a letdown, but if management can stabilize the backlog and execute on affordability programs without gutting margins, this stock could rebound. The forward P/E of 5.77 is a steal for a company with a $4.5 billion revenue run rate and 12% annual growth.

But the risks are real. If the Q1 homes delivered (2,221) miss expectations, or if management signals further margin pressure, this stock could keep falling. Still, the long-term demographic tailwinds—millennial homeownership, urban sprawl, and a recovering economy—are all in M/I’s favor.

Final Verdict: M/I Homes is a buy-the-dip candidate. The stock’s cheap, its balance sheet is bulletproof, and its strategy to tackle affordability is bold. If the Q1 report shows execution on backlog and margins, this could be a steal. But if margins crater, stay on the sidelines.

Investors, this is a test of patience. M/I’s got the tools to win—but the next 24 hours will tell the tale.