Despite its impressive fundamentals, NYSE:SM remains undervalued.

Last update: Dec 17, 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.

Assessing Valuation for NYSE:SM

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NYSE:SM, the assigned 9 reflects its valuation:

SM is valuated cheaply with a Price/Earnings ratio of 6.09.
Based on the Price/Earnings ratio, SM is valued cheaply inside the industry as 82.84% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of SM to the average of the S&P500 Index (28.94), we can say SM is valued rather cheaply.
SM is valuated cheaply with a Price/Forward Earnings ratio of 5.13.
Compared to the rest of the industry, the Price/Forward Earnings ratio of SM indicates a rather cheap valuation: SM is cheaper than 85.29% of the companies listed in the same industry.
SM is valuated cheaply when we compare the Price/Forward Earnings ratio to 23.53, which is the current average of the S&P500 Index.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of SM indicates a rather cheap valuation: SM is cheaper than 80.88% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, SM is valued a bit cheaper than 70.59% of the companies in the same industry.
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 12.80% in the coming years. This may justify a more expensive valuation.

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 7 is a significant indicator of profitability:

SM has a better Return On Assets (10.33%) than 76.47% of its industry peers.
SM's Return On Equity of 20.41% is fine compared to the rest of the industry. SM outperforms 73.53% of its industry peers.
The Return On Invested Capital of SM (10.76%) is better than 70.59% of its industry peers.
The last Return On Invested Capital (10.76%) 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.
The Profit Margin of SM (33.89%) is better than 82.35% of its industry peers.
In the last couple of years the Profit Margin of SM has grown nicely.
SM's Operating Margin of 38.74% is fine compared to the rest of the industry. SM outperforms 76.96% of its industry peers.
SM's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 77.12%, SM belongs to the top of the industry, outperforming 87.75% of the companies in the same industry.
SM's Gross Margin has improved in the last couple of years.

Health Analysis 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 2.04, SM is in the better half of the industry, outperforming 60.78% of the companies in the same industry.
A Current Ratio of 3.52 indicates that SM has no problem at all paying its short term obligations.
SM's Current ratio of 3.52 is amongst the best of the industry. SM outperforms 83.82% of its industry peers.
SM has a Quick Ratio of 3.52. This indicates that SM is financially healthy and has no problem in meeting its short term obligations.
With an excellent Quick ratio value of 3.52, SM belongs to the best of the industry, outperforming 85.78% of the companies in the same industry.

Deciphering NYSE:SM's Growth Rating

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:SM scores a 6 out of 10:

The Earnings Per Share has grown by an nice 14.92% over the past year.
Measured over the past years, SM shows a very strong growth in Earnings Per Share. The EPS has been growing by 187.86% on average per year.
The Earnings Per Share is expected to grow by 9.18% on average over the next years. This is quite good.
The Revenue is expected to grow by 12.82% on average over the next years. This is quite good.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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

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.