NYSE:SM is probably undervalued for the fundamentals it is displaying.

Last update: Aug 8, 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 8 out of 10:

SM is valuated cheaply with a Price/Earnings ratio of 6.49.
Compared to the rest of the industry, the Price/Earnings ratio of SM indicates a somewhat cheap valuation: SM is cheaper than 78.95% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 28.36. SM is valued rather cheaply when compared to this.
With a Price/Forward Earnings ratio of 3.90, the valuation of SM can be described as very cheap.
92.82% of the companies in the same industry are more expensive than SM, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 20.01. SM is valued rather cheaply when compared to this.
Based on the Enterprise Value to EBITDA ratio, SM is valued cheaper than 81.34% 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.
SM has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as SM's earnings are expected to grow with 21.38% in the coming years.

Assessing Profitability for NYSE:SM

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NYSE:SM scores a 7 out of 10:

SM's Return On Assets of 11.73% is fine compared to the rest of the industry. SM outperforms 77.99% of its industry peers.
SM has a Return On Equity of 20.29%. This is in the better half of the industry: SM outperforms 69.86% of its industry peers.
Looking at the Return On Invested Capital, with a value of 13.05%, SM is in the better half of the industry, outperforming 73.68% of the companies in the same industry.
The last Return On Invested Capital (13.05%) for SM is well below the 3 year average (22.74%), which needs to be investigated, but indicates that SM had better years and this may not be a problem.
SM has a Profit Margin of 31.80%. This is in the better half of the industry: SM outperforms 79.43% of its industry peers.
SM's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 38.33%, SM is in the better half of the industry, outperforming 74.64% of the companies in the same industry.
SM's Operating Margin has improved in the last couple of years.
SM's Gross Margin of 76.33% is amongst the best of the industry. SM outperforms 83.73% of its industry peers.
SM's Gross Margin has improved in the last couple of years.

Assessing Health Metrics for NYSE:SM

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:SM has earned a 6 out of 10:

Looking at the Altman-Z score, with a value of 2.35, SM is in the better half of the industry, outperforming 66.03% of the companies in the same industry.
SM has a better Debt to FCF ratio (4.81) than 62.68% of its industry peers.
A Debt/Equity ratio of 0.43 indicates that SM is not too dependend on debt financing.
SM has a better Current ratio (1.48) than 61.24% of its industry peers.
The Quick ratio of SM (1.48) is better than 66.03% of its industry peers.

Assessing Growth for NYSE:SM

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NYSE:SM boasts a 5 out of 10:

The Earnings Per Share has been growing by 187.86% on average over the past years. This is a very strong growth
Based on estimates for the next years, SM will show a quite strong growth in Earnings Per Share. The EPS will grow by 10.07% on average per year.
SM is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 10.95% yearly.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

More Decent Value stocks can be found in our Decent Value screener.

For an up to date full fundamental analysis you can check the fundamental report of SM

Disclaimer

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.