Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of M/I Homes (NYSE: MHO ) fell as much as 10% today after the company released earnings.
So what: Revenue jumped 37%, to $234.6 million, in the second quarter, and net income nearly doubled, to $6.05 million, or $0.25 per share. But analysts were expecting $258 million in revenue, and earnings of $0.36 per share, so results were still behind estimates.
Now what: Disappointing results were a theme for homebuilders today, and investors and analysts may have gotten ahead of themselves in expectations for the housing recovery. To make matters worse, interest rates are up, and buyers will be pressured by higher mortgage costs, which could suppress sales going forward. M/I Homes still trades at just nine times forward estimates and is seeing strong growth, so I don't think this report is reason to panic. It may, however, be time to lower expectations a bit for the industry.
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