M/I Homes (MHO) shares are +48% YTD with the strong housing market and one of the smaller names in the group that consistently posts strong quarterly results.

MHO designs, markets, constructs and sells single-family homes and attached townhomes to first-time, move-up, empty-nester, and luxury buyers. MHO primarily constructs homes in planned development communities and mixed-use communities. Its residential communities are generally located in suburban areas that are easily accessible through public and personal transportation. MHO offers homes ranging from a base sales price of approximately $200,000 to $1,045,000 and from approximately 1,100 to 5,500 square feet. MHO’s “Smart Series” accounted for 34% of total sales in 2020 and is intended to offer buyers excellent value, great locations, and pre-selected packages of upgraded finishes and appliances. It targets entry-level and move-down buyers and focuses significant attention on affordability, livability and offering some design flexibility. MHO’s footprint spans 15 markets across 10 states and it also offers Financial Services and has a Land Lot strategy.

MHO has a market cap of $1.87B and trades 4.9X Earnings and 7.5X FCF with revenues seen rising 26% in 2021 and then returning to a more normalized 6-10% annual growth. MHO is coming off a record strong quarter with impressive margin improvement considering significant cost pressures. MHO expects to open a record number of new communities in both the first half of 2022 and the second half of 2022.

MHO’s average sales price of homes delivered during 2020 was $381,000, and the average sales price of our homes in backlog at December 31, 2020 was $419,000. MHO has seen a 14% CAGR in net contract growth since 2008. MHO’s ROE has steadily improved to 27% this year from 10% in 2017 and puts it near the top of the industry. Its backlog has risen to nearly 5500 homes ion 2021 from 2,845 in 2019. Adjusted Gross Margins are also rising steadily to hit record highs and it is showing improving operating leverage while its Debt leverage ratios are low compared to peers.

The homebuilding industry is highly fragmented and there are approximately twenty publicly traded companies. MHO is one of the smaller ones of the group but stands out across every financial metric and looks primed to continue to succeed in this robust housing environment.