In a market where value is scarce, NYSE:SM offers a refreshing opportunity with its solid fundamentals.

Last update: Jul 18, 2024

SM ENERGY CO (NYSE:SM) was identified as a decent value stock by our stock screener. NYSE:SM scores well on profitability, solvency and liquidity. At the same time it seems to be priced very reasonably. We'll explore this a bit deeper below.

A Closer Look at Valuation for NYSE:SM

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. NYSE:SM boasts a 7 out of 10:

With a Price/Earnings ratio of 7.79, the valuation of SM can be described as very cheap.
75.36% of the companies in the same industry are more expensive than SM, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of SM to the average of the S&P500 Index (29.15), we can say SM is valued rather cheaply.
With a Price/Forward Earnings ratio of 6.04, the valuation of SM can be described as very cheap.
Compared to the rest of the industry, the Price/Forward Earnings ratio of SM indicates a rather cheap valuation: SM is cheaper than 85.78% of the companies listed in the same industry.
SM's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 20.79.
SM's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. SM is cheaper than 78.67% of the companies in the same industry.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of SM may justify a higher PE ratio.

Assessing Profitability for NYSE:SM

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NYSE:SM, the assigned 7 is a significant indicator of profitability:

SM has a better Return On Assets (11.73%) than 76.78% of its industry peers.
SM has a better Return On Equity (20.29%) than 68.72% of its industry peers.
SM has a better Return On Invested Capital (13.05%) than 72.51% of its industry peers.
The 3 year average ROIC (22.74%) for SM is well above the current ROIC(13.05%). The reason for the recent decline needs to be investigated.
With a decent Profit Margin value of 31.80%, SM is doing good in the industry, outperforming 79.62% of the companies in the same industry.
In the last couple of years the Profit Margin of SM has grown nicely.
SM's Operating Margin of 38.33% is fine compared to the rest of the industry. SM outperforms 73.93% of its industry peers.
In the last couple of years the Operating Margin of SM has grown nicely.
The Gross Margin of SM (76.33%) is better than 84.36% of its industry peers.
In the last couple of years the Gross Margin of SM has grown nicely.

How We Gauge Health for NYSE:SM

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NYSE:SM scores a 6 out of 10:

SM's Altman-Z score of 2.55 is fine compared to the rest of the industry. SM outperforms 67.77% of its industry peers.
SM has a Debt to FCF ratio of 4.81. This is in the better half of the industry: SM outperforms 62.56% of its industry peers.
SM has a Debt/Equity ratio of 0.43. This is a healthy value indicating a solid balance between debt and equity.
With a decent Current ratio value of 1.48, SM is doing good in the industry, outperforming 61.14% of the companies in the same industry.
Looking at the Quick ratio, with a value of 1.48, SM is in the better half of the industry, outperforming 66.35% of the companies in the same industry.

How do we evaluate the Growth for NYSE:SM?

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:SM was assigned a score of 4 for growth:

SM shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 187.86% yearly.
The Earnings Per Share is expected to grow by 10.07% on average over the next years. This is quite good.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

Check the latest full fundamental report of SM for a complete fundamental analysis.

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.