When you look at NYSE:SM, it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Last update: Nov 4, 2024

Our stock screener has singled out SM ENERGY CO (NYSE:SM) as a stellar value proposition. NYSE:SM not only scores well in profitability, solvency, and liquidity but also maintains a very reasonable price point. We'll explore this further.

Valuation Examination for NYSE:SM

To assess a stock's valuation, ChartMill utilizes a Valuation Rating on a scale of 0 to 10. This comprehensive assessment considers various valuation aspects, comparing price to earnings and cash flows, while factoring in profitability and growth. NYSE:SM has achieved a 9 out of 10:

Based on the Price/Earnings ratio of 6.23, the valuation of SM can be described as very cheap.
Based on the Price/Earnings ratio, SM is valued a bit cheaper than the industry average as 79.90% of the companies are valued more expensively.
SM is valuated cheaply when we compare the Price/Earnings ratio to 30.16, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 4.83 indicates a rather cheap valuation of SM.
89.22% of the companies in the same industry are more expensive than SM, based on the Price/Forward Earnings ratio.
SM is valuated cheaply when we compare the Price/Forward Earnings ratio to 23.23, which is the current average of the S&P500 Index.
Based on the Enterprise Value to EBITDA ratio, SM is valued cheaper than 82.84% of the companies in the same industry.
65.20% of the companies in the same industry are more expensive than SM, based on the Price/Free Cash Flow ratio.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of SM may justify a higher PE ratio.
A more expensive valuation may be justified as SM's earnings are expected to grow with 16.89% in the coming years.

Profitability Analysis 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 8 is a significant indicator of profitability:

SM has a Return On Assets of 10.33%. This is in the better half of the industry: SM outperforms 75.49% of its industry peers.
The Return On Equity of SM (20.41%) is better than 71.08% of its industry peers.
SM's Return On Invested Capital of 10.76% is fine compared to the rest of the industry. SM outperforms 65.69% of its industry peers.
The 3 year average ROIC (22.74%) for SM is well above the current ROIC(10.76%). The reason for the recent decline needs to be investigated.
SM has a better Profit Margin (33.89%) than 81.37% of its industry peers.
In the last couple of years the Profit Margin of SM has grown nicely.
With a decent Operating Margin value of 38.74%, SM is doing good in the industry, outperforming 75.00% of the companies in the same industry.
SM's Operating Margin has improved in the last couple of years.
With an excellent Gross Margin value of 77.12%, SM belongs to the best of the industry, outperforming 87.25% of the companies in the same industry.
SM's Gross Margin has improved in the last couple of years.

Deciphering NYSE:SM's Health Rating

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NYSE:SM was assigned a score of 6 for health:

A Current Ratio of 3.52 indicates that SM has no problem at all paying its short term obligations.
SM has a Current ratio of 3.52. This is amongst the best in the industry. SM outperforms 82.35% of its industry peers.
A Quick Ratio of 3.52 indicates that SM has no problem at all paying its short term obligations.
The Quick ratio of SM (3.52) is better than 83.33% of its industry peers.

Understanding NYSE:SM's Growth Score

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NYSE:SM, the assigned 6 reflects its growth potential:

The Earnings Per Share has grown by an nice 14.92% over the past year.
The Earnings Per Share has been growing by 187.86% on average over the past years. This is a very strong growth
SM is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.07% yearly.
Based on estimates for the next years, SM will show a quite strong growth in Revenue. The Revenue will grow by 12.50% on average per year.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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

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

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.