In a market where value is scarce, NYSE:SM offers a refreshing opportunity with its solid fundamentals.

Last update: Jan 29, 2025

Our stock screening tool has pinpointed SM ENERGY CO (NYSE:SM) as an undervalued stock. NYSE:SM maintains a solid financial footing. Furthermore, it remains attractively priced. Let's delve into the specifics below.

Understanding NYSE:SM's Valuation Score

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 8 reflects its valuation:

SM is valuated cheaply with a Price/Earnings ratio of 6.13.
83.98% of the companies in the same industry are more expensive than SM, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of SM to the average of the S&P500 Index (28.42), we can say SM is valued rather cheaply.
SM is valuated cheaply with a Price/Forward Earnings ratio of 5.18.
SM's Price/Forward Earnings ratio is rather cheap when compared to the industry. SM is cheaper than 87.86% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of SM to the average of the S&P500 Index (24.39), we can say SM is valued rather cheaply.
82.52% of the companies in the same industry are more expensive than SM, based on the Enterprise Value to EBITDA ratio.
71.84% 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 decent profitability rating of SM may justify a higher PE ratio.

Analyzing Profitability Metrics

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:

The Return On Assets of SM (10.33%) is better than 77.18% of its industry peers.
SM has a Return On Equity of 20.41%. This is in the better half of the industry: SM outperforms 74.27% of its industry peers.
With a decent Return On Invested Capital value of 10.76%, SM is doing good in the industry, outperforming 70.39% of the companies in the same industry.
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.
Looking at the Profit Margin, with a value of 33.89%, SM belongs to the top of the industry, outperforming 83.50% of the companies in the same industry.
SM's Profit Margin has improved in the last couple of years.
The Operating Margin of SM (38.74%) is better than 78.16% of its industry peers.
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 87.38% of its industry peers.
In the last couple of years the Gross Margin of SM has grown nicely.

Health Insights: NYSE:SM

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NYSE:SM, the assigned 6 reflects its health status:

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 83.01% 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.
SM has a better Quick ratio (3.52) than 84.95% of its industry peers.

Growth Examination 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:

The Earnings Per Share has grown by an nice 14.92% over the past year.
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.
Based on estimates for the next years, SM will show a quite strong growth in Revenue. The Revenue will grow by 12.60% on average per year.
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.

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

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.