M/I Homes (MHO) to Report Q3 Earnings: What’s in the Cards?

M/I Homes, Inc. MHO is slated to report third-quarter 2020 results on Oct 28, before the opening bell.

In the last reported quarter, the company’s earnings and revenues handily surpassed the Zacks Consensus Estimate by 119.8% and 21.2%, respectively. On a year-over-year basis, earnings and revenues grew 75% and 15%, respectively, buoyed by a recovery in demand.

The company surpassed earnings estimates in three of the trailing four quarters, with the average being 48.4%.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been unchanged at $1.49 per share over the past 30 days. The said figure indicates a 12.9% increase from the year-ago earnings of $1.32 per share. Also, the consensus mark for revenues is $674.8 million, suggesting 3.3% year-over-year growth.

MI Homes, Inc. Price and EPS Surprise

MI Homes, Inc. Price and EPS Surprise

MI Homes, Inc. price-eps-surprise | MI Homes, Inc. Quote

Factors at Play

M/I Homes’ third-quarter Homebuilding revenues (which account for 98% of total revenues) are expected to have increased from the year-ago level, buoyed by solid U.S. housing market fundamentals. Resilient housing market conditions are evident from improved monthly U.S. home sales data. Markedly, existing home sales grew for the fourth consecutive month in September, according to the National Association of Realtors. Single-family housing starts, the largest share of the housing market, jumped 8.5% to a rate of 1.108 million units last month. Overall, housing starts increased 1.9% to a seasonally adjusted annual rate of 1.415 million units last month.

For M/I Homes, the consensus mark for net new homes delivered is 1,735 homes, which indicates 5.1% year-over-year growth. The Zacks Consensus Estimate for average sales price is currently pegged at $379, implying a 0.8% decrease from the year-ago period. In order to meet affordability concerns, the company reduced the average sales price for the smart series line of homes.

The Zacks Consensus Estimate for homebuilding revenues is currently pegged at $657 million, implying 2.7% year-over-year growth.

The same for new contracts is pegged at 1,979 units, suggesting an increase of 15% year over year. The consensus estimate for backlog is pegged at 3,935 homes, implying a 35% increase from the year-ago period.

However, higher land and labor costs are likely to put pressure on the company’s third-quarter results.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for M/I Homes in the quarter to be reported. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, M/I Homes currently carries a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

TopBuild Corp. BLD has an Earnings ESP of +1.43% and holds a Zacks Rank #1.

Century Communities, Inc. CCS has an Earnings ESP of +7.53% and carries a Zacks Rank #1.

D.R. Horton, Inc. DHI has an Earnings ESP of +3.48% and carries a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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