M/I Homes Inc. Stock Downgraded (MHO)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- M/I Homes (NYSE: MHO) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we also find weaknesses including poor profit margins, weak operating cash flow and a generally disappointing performance in the stock itself.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:
  • MHO's revenue growth has slightly outpaced the industry average of 29.0%. Since the same quarter one year prior, revenues rose by 34.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Household Durables industry and the overall market, M/I HOMES INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • MHO's debt-to-equity ratio of 0.93 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • The gross profit margin for M/I HOMES INC is rather low; currently it is at 19.93%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 4.24% trails that of the industry average.
  • Net operating cash flow has declined marginally to -$33.54 million or 9.33% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

M/I Homes, Inc., together with its subsidiaries, engages in the building of single-family homes in the United States. The company operates in two segments, Homebuilding and Financial Services. The company has a P/E ratio of five, below the S&P 500 P/E ratio of 17.7. M/I Homes has a market cap of $617.5 million and is part of the industrial goods sector and materials & construction industry. Shares are down 2.7% year to date as of the close of trading on Friday.

You can view the full M/I Homes Ratings Report or get investment ideas from our investment research center.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

More from Markets

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

Flashback Friday: The Market Movers

Flashback Friday: The Market Movers

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices

OPEC Deal Doesn't Boost Production Enough to Drive Down Crude, Gasoline Prices