NYSE:SM is a prime example of a stock that offers more than what meets the eye in terms of fundamentals.

Last update: Jan 7, 2025

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.

Valuation Analysis for 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 8 for valuation:

SM is valuated cheaply with a Price/Earnings ratio of 6.32.
Based on the Price/Earnings ratio, SM is valued cheaply inside the industry as 82.59% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 27.40, SM is valued rather cheaply.
Based on the Price/Forward Earnings ratio of 5.34, the valuation of SM can be described as very cheap.
Based on the Price/Forward Earnings ratio, SM is valued cheaper than 86.07% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of SM to the average of the S&P500 Index (23.67), we can say SM is valued rather cheaply.
Based on the Enterprise Value to EBITDA ratio, SM is valued cheaply inside the industry as 81.59% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, SM is valued a bit cheaper than the industry average as 70.15% of the companies are valued more expensively.
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.

Profitability Examination for NYSE:SM

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NYSE:SM, the assigned 7 is noteworthy for profitability:

SM has a Return On Assets of 10.33%. This is in the better half of the industry: SM outperforms 76.62% of its industry peers.
With a decent Return On Equity value of 20.41%, SM is doing good in the industry, outperforming 74.13% of the companies in the same industry.
With a decent Return On Invested Capital value of 10.76%, SM is doing good in the industry, outperforming 70.65% of the companies in the same industry.
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 83.08% of its industry peers.
In the last couple of years the Profit Margin of SM has grown nicely.
Looking at the Operating Margin, with a value of 38.74%, SM is in the better half of the industry, outperforming 77.11% of the companies in the same industry.
In the last couple of years the Operating Margin of SM has grown nicely.
SM's Gross Margin of 77.12% is amongst the best of the industry. SM outperforms 87.56% of its industry peers.
SM's Gross Margin has improved in the last couple of years.

How We Gauge Health for NYSE:SM

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:

SM's Altman-Z score of 2.07 is fine compared to the rest of the industry. SM outperforms 60.20% of its industry peers.
SM has a Current Ratio of 3.52. This indicates that SM is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of SM (3.52) is better than 83.58% 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.
Looking at the Quick ratio, with a value of 3.52, SM belongs to the top of the industry, outperforming 85.57% of the companies in the same industry.

Assessing Growth Metrics for NYSE:SM

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NYSE:SM has received a 6 out of 10:

SM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 14.92%, which is quite good.
SM shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 187.86% yearly.
Based on estimates for the next years, SM will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.18% on average per year.
The Revenue is expected to grow by 12.61% 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.

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

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

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.