M/I Homes Price Target Cut by Freedom Broker as Earnings Fall Short

Broker views remain divided

Freedom Broker reduced its target for M/I Homes to $155 from $172 in a Friday morning report, while retaining its buy rating. Citigroup maintained a market outperform rating, and Jefferies set a $165 target.

Other firms were more cautious: Weiss Ratings reiterated hold, Zacks Research moved its rating from hold to strong sell, and Zelman & Associates lowered its view from outperform to neutral. The report says one analyst has a strong-buy rating, three have buy ratings, two have hold ratings and one has a sell rating; its account of the average rating is cut off.

Quarterly results miss estimates

M/I Homes reported $2.70 in earnings per share for the quarter, below the $3.25 consensus estimate. Revenue was $1.08 billion, compared with an expected $1.11 billion. Revenue declined 1.9% year over year. The company had a net margin of 6.59% and return on equity of 10.12%; analysts forecast full-year earnings per share of $12.12.

Shares and company profile

M/I Homes shares opened Friday at $124.14. The company’s market capitalization was $3.14 billion, and its stock had a 52-week range of $113.40 to $163.66. The homebuilder develops and sells single-family homes for first-time, move-up and luxury buyers. Its activities include land development, design, construction, marketing and sales, and it offers mortgage financing through M/I Financial and title-related services through affiliated operations.

Insider sale and investors

Chief Financial Officer Phillip Creek sold 10,000 shares on August 5 at an average price of $151.28, for proceeds of $1,512,800. After the sale, he held 30,918 shares, and the transaction reduced his ownership by 24.44%.

Institutional investors held 95.14% of the company’s stock. BlackRock, Donald Smith & CO., Bank of America, Bank of New York Mellon and Basswood Capital Management were among investors reported to have acquired stakes in the second quarter.