Investors should take notice of NYSE:SM—it offers a great deal for the fundamentals it presents.

Last update: Aug 29, 2024

Our stock screener has spotted SM ENERGY CO (NYSE:SM) as an undervalued stock with solid fundamentals. NYSE:SM shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Evaluating Valuation: NYSE:SM

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NYSE:SM was assigned a score of 9 for valuation:

A Price/Earnings ratio of 7.00 indicates a rather cheap valuation of SM.
82.13% of the companies in the same industry are more expensive than SM, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 30.00. SM is valued rather cheaply when compared to this.
A Price/Forward Earnings ratio of 4.51 indicates a rather cheap valuation of SM.
93.24% of the companies in the same industry are more expensive than SM, based on the Price/Forward Earnings ratio.
SM's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 21.62.
SM's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. SM is cheaper than 80.19% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, SM is valued a bit cheaper than the industry average as 61.84% of the companies are valued more expensively.
SM's 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.
SM's earnings are expected to grow with 19.04% in the coming years. This may justify a more expensive valuation.

Assessing Profitability for NYSE:SM

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NYSE:SM has earned a 7 out of 10:

SM's Return On Assets of 12.18% is fine compared to the rest of the industry. SM outperforms 79.71% of its industry peers.
With a decent Return On Equity value of 21.10%, SM is doing good in the industry, outperforming 71.50% of the companies in the same industry.
SM has a better Return On Invested Capital (13.61%) than 76.33% of its industry peers.
The 3 year average ROIC (22.74%) for SM is well above the current ROIC(13.61%). The reason for the recent decline needs to be investigated.
The Profit Margin of SM (33.18%) is better than 82.13% of its industry peers.
In the last couple of years the Profit Margin of SM has grown nicely.
SM has a better Operating Margin (39.86%) than 77.78% of its industry peers.
In the last couple of years the Operating Margin of SM has grown nicely.
With an excellent Gross Margin value of 77.51%, SM belongs to the best of the industry, outperforming 87.44% of the companies in the same industry.
SM's Gross Margin has improved in the last couple of years.

Exploring NYSE:SM's Health

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 has a better Altman-Z score (2.51) than 67.63% of its industry peers.
The Debt to FCF ratio of SM is 3.18, which is a good value as it means it would take SM, 3.18 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of SM (3.18) is better than 69.08% of its industry peers.
SM has a Debt/Equity ratio of 0.41. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Quick ratio, with a value of 1.29, SM is in the better half of the industry, outperforming 63.28% of the companies in the same industry.

Looking at the Growth

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 6 out of 10:

SM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 15.03%, which is quite good.
The Earnings Per Share has been growing by 187.86% on average over the past years. This is a very strong growth
The Earnings Per Share is expected to grow by 10.07% on average over the next years. This is quite good.
The Revenue is expected to grow by 12.70% on average over the next years. This is quite good.
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.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Our latest full fundamental report of SM contains the most current fundamental analsysis.

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.