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Sm Energy Company (SM)
NYSE:SM
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SM Energy
(NYSE:SM)71Outperform
Positive Factors
Reserves Growth
SM reported year-end proved reserves of 678.3 MMboe, which is 12% higher compared to the previous year.
Valuation
SM trades at lower EV/EBITDA multiples compared to its peers, indicating a relative valuation advantage.
Negative Factors
Operational Challenges
Rail issues in Uinta may have impacted volumes in 4Q, potentially causing a decline in December volumes.
SM Energy (SM) vs. S&P 500 (SPY)
Market Cap
$3.30B
Dividend Yield2.63%
Average Volume (3M)2.01M
Price to Earnings (P/E)4.3
Beta (1Y)1.01
Revenue Growth13.33%
EPS Growth-2.72%
CountryUS
Employees544
SectorEnergy
Sector Strength57
IndustryFossil Fuels
Share Statistics
EPS (TTM)6.67
Shares Outstanding114,461,940
10 Day Avg. Volume3,084,439
30 Day Avg. Volume2,013,344
Financial Highlights & Ratios
PEG Ratio1.17
Price to Book (P/B)N/A
Price to Sales (P/S)1.23
Price to Cash Flow (P/CF)1.40
P/FCF Ratio3.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$52.80Price Target Upside91.86% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
SM Energy Business Overview & Revenue Model
Company DescriptionSM Energy Company is an independent energy company engaged in the acquisition, exploration, development, and production of oil and natural gas resources. Headquartered in Denver, Colorado, SM Energy operates primarily in the Permian Basin and the Eagle Ford Shale, two of the most prolific hydrocarbon-producing regions in the United States. The company focuses on developing its diverse portfolio of high-quality assets and applying advanced technologies to maximize resource potential and shareholder value.
How the Company Makes MoneySM Energy generates revenue primarily through the sale of oil, natural gas, and natural gas liquids (NGLs) extracted from its wells in the Permian Basin and Eagle Ford Shale. The company's revenue streams are largely dependent on the production volume and market prices of these commodities. SM Energy employs a strategy of optimizing its drilling and production techniques to enhance efficiency and increase output, thereby boosting revenue. The company may also enter into joint ventures, partnerships, or hedging arrangements to manage risks associated with commodity price volatility and enhance financial stability. Additionally, SM Energy occasionally monetizes non-core assets through sales or trades to focus on its core operations and improve its financial performance.
SM Energy Financial Statement Overview
Summary
SM Energy's financial health has improved with strong margins and cash flow, but high leverage remains a concern. The company has turned around from past losses to report robust profits, reflecting effective management. Continued focus on reducing debt and sustaining revenue growth will be crucial for long-term financial stability.Income Statement
SM Energy has shown a robust improvement in its income statement over the years. The gross profit margin significantly improved from a negative margin in 2020 to a full profit margin by 2024. The net profit margin also turned positive after years of losses, indicating operational efficiencies. Revenue has been volatile, but the recent growth trend is positive. EBIT and EBITDA margins have improved, reflecting better cost management and operational leverage.78
Positive
Balance Sheet
The balance sheet shows a strengthening equity base, with stockholders' equity increasing significantly by 2024. The debt-to-equity ratio has improved, showing reduced financial leverage, although the company still carries a notable amount of debt. The equity ratio indicates a stable capital structure, but the high total debt remains a concern for financial flexibility.72
Positive
Cash Flow
Cash flow from operations has been consistently strong, supporting the company's capital expenditures and free cash flow generation. The free cash flow has shown growth, indicating efficient cash management. The operating cash flow to net income ratio suggests strong cash conversion, although fluctuations in investing cash flow suggest volatility in capital investment.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.67B | 2.37B | 3.35B | 2.60B | 1.13B | Gross Profit |
| 1.23B | 1.12B | 2.12B | 1.32B | -49.62M | EBIT |
| 1.08B | 986.91M | 1.58B | 1.15B | -218.55M | EBITDA |
| 1.92B | 1.70B | 2.19B | 1.02B | 48.57M | Net Income Common Stockholders |
| 770.29M | 817.88M | 1.11B | 36.23M | -764.61M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 0.00 | 616.16M | 445.00M | 332.72M | 10.00K | Total Assets |
| 8.58B | 6.38B | 5.72B | 5.23B | 4.98B | Total Debt |
| 2.71B | 1.58B | 1.57B | 2.08B | 2.21B | Net Debt |
| 2.71B | 959.17M | 1.13B | 1.75B | 2.21B | Total Liabilities |
| 4.34B | 2.76B | 2.63B | 3.17B | 2.96B | Stockholders Equity |
| 4.24B | 3.62B | 3.09B | 2.06B | 2.02B |
| Cash Flow | Free Cash Flow | |||
| 471.88M | 475.05M | 806.47M | 481.61M | 235.29M | Operating Cash Flow |
| 1.78B | 1.57B | 1.69B | 1.16B | 790.94M | Investing Cash Flow |
| -3.41B | -1.10B | -880.26M | -667.24M | -555.57M | Financing Cash Flow |
| 1.01B | -304.54M | -693.86M | -159.83M | -235.38M |
SM Energy Technical Analysis
Negative
27.52
Price Trends
38.06
Negative
40.23
Negative
42.22
Negative
Market Momentum
-2.97
Positive
16.94
Positive
6.30
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SM, the sentiment is Negative. The current price of 27.52 is below the 20-day moving average (MA) of 34.90, below the 50-day MA of 38.06, and below the 200-day MA of 42.22, indicating a bearish trend. The MACD of -2.97 indicates Positive momentum. The RSI at 16.94 is Positive, neither overbought nor oversold. The STOCH value of 6.30 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SM.
SM Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $5.81B | 6.51 | 19.67% | 2.07% | 23.47% | 0.80% | |
71 Outperform | $3.30B | 4.33 | 19.62% | 2.63% | 13.33% | -2.72% | |
57 Neutral | $8.34B | 5.35 | -5.98% | 7.29% | 0.20% | -69.45% | |
56 Neutral | $9.14B | 34.67 | 6.88% | 0.84% | -7.57% | -69.25% | |
49 Neutral | $5.61B | ― | -9.51% | 0.66% | -22.76% | -199.21% |
* Energy Sector Average
Performance Comparison
SM
SM Energy
27.15
-16.52
-37.83%
CRK
Comstock Resources
16.92
8.51
101.19%
MTDR
Matador Resources
44.79
-18.53
-29.26%
RRC
Range Resources
37.53
4.99
15.33%
SM Energy Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: -29.13% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call presented numerous positive developments, including record-breaking oil production, strong reserve growth, and significant increases in free cash flow and dividend payouts. However, the high capital expenditure and integration challenges present some concerns. Overall, the positive aspects significantly outweigh the negatives.Highlights
Record-Breaking Oil Production
2024 saw record daily oil production, which was up 23% year-over-year, contributing to a total production increase of 12%.
Significant Free Cash Flow Increase
The 2025 plan anticipates a year-over-year increase in free cash flow of more than 40%, with a free cash flow yield to current market capitalization of approximately 15%.
Strong Reserve Growth
Record year-end estimated net proved reserves total 678 million barrels of oil equivalent, with reserves growing 12% and oil reserves growing 29% from year-end 2023.
Increased Dividend
The company increased its sustainable annual fixed dividend to $0.80 per share, marking a record high.
Uinta Basin Acquisition
The addition of Uinta Basin assets resulted in more than 20% production growth and over 30% oil production growth year-over-year.
Operational Efficiency
Significant improvements in drilling and completion efficiencies: Midland saw a 20% improvement in drilling footage per day and nearly doubled completion efficiencies, while South Texas improved drilling by 27% and completion efficiency by 18%.
Lowlights
High Capital Expenditure
2025 capital program is expected to be $1.3 billion, excluding acquisitions and non-operated activity, maintaining the high expenditure levels seen in 2024.
Integration Challenges
Integration of the new Utah asset is a significant task, with $7 million in one-time costs associated with these efforts.
Company Guidance
During the call, SM Energy provided guidance for 2025, highlighting a projected 20% growth in production and more than 30% growth in oil production year-over-year. The company plans to invest approximately $1.3 billion in capital expenditures, excluding acquisitions, with a focus on drilling and completing approximately 105 and 150 net wells, respectively. Production costs are expected to be between $5.30 and $5.50 per BOE, and the company aims to achieve a free cash flow increase of over 40% compared to 2024. The anticipated production range is 200,000 to 215,000 BOE per day, with 51% to 52% being oil. Additionally, SM Energy's financial strategy includes maintaining a strong balance sheet with a target leverage of around 1 times net debt to adjusted EBITDAX, prioritizing debt reduction, and returning capital to stockholders through dividends and share repurchases.SM Energy Corporate Events
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
SM Energy Unveils 2025 Plan and Leadership Changes
Positive
Feb 19, 2025
SM Energy reported record operational and financial results for 2024, with a 23% increase in oil production and a 12% rise in net proved reserves. The company outlined a transformative 2025 plan, highlighting substantial production growth through the integration of Uinta Basin assets and a focus on capital efficiency. SM Energy also announced leadership changes, including the retirement of Jennifer Martin Samuels and the appointment of new senior executives, effective March 2025, aimed at supporting its strategic goals.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.