SM Energy Co (SM) stock analysis

P/E above its 5-year median

SM Energy's P/E of 7.6 is above its own 5-year median of 5.1.

P/E below the industry

SM Energy's P/E of 7.6 is below the Crude Petroleum and Natural Gas median of 10.4.

EV/EBITDA above its 5-year median

SM Energy's EV/EBITDA of 4.3 is above its 5-year median of 3.2.

P/B below the industry

SM Energy's price-to-book of 0.95 is below the Crude Petroleum and Natural Gas median of 1.33.

Trading below fair value

The share price of $31.16 is below our fair value estimate of $39.24.

Margin of safety over 20%

The price is 20.6% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -2.1% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -14.3% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing faster than the industry

Revenue grew 108% over the last twelve months; the Crude Petroleum and Natural Gas median is 8.7%.

Guidance raised

SM Energy raised its Full Year 2026 Cash Taxes outlook on Nov 3, 2026.

Gross margin improving

Gross margin was 74.2% over the last twelve months, against 73.0% a year earlier.

Return on equity over 15%

Return on equity was 15.0% over the last twelve months and averaged 20.7% over five years.

Return on capital over 10%

Return on invested capital was 20.5%, above the 10% that usually covers the cost of capital.

Return on equity above the industry

SM Energy's return on equity of 15.0% is above the Crude Petroleum and Natural Gas median of 5.5%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin below its 5-year average

Net margin was 13.7% over the last twelve months, against a 5-year average of 23.6%.

Net margin above the industry

SM Energy's net margin of 13.7% is above the Crude Petroleum and Natural Gas median of 3.8%.

Debt level

Needs debt and equity figures.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt coverage

Needs operating cash flow.

Interest not well covered

Operating income covers interest expense 4.2 times; we look for at least 5.

Short-term assets don't cover short-term debts

Current assets are 0.57 times current liabilities.

Elevated bankruptcy risk

The Altman Z-score is 1.25; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

SM Energy paid dividends worth 2.8% of the share price over the last twelve months.

Yield below Treasuries

The 2.8% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; SM Energy yields 2.8%.

Dividend was cut

The dividend per share fell by more than 10% at least once in the last 10 fiscal years.

Covered by earnings

Dividends take 22.4% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.