SM Energy (SM): Assessing Valuation as Leadership Transition Signals New Chapter

Big changes are underway at SM Energy (SM). If you are watching the stock, you might be wondering what comes next. The company just announced that longtime CEO Herbert S. Vogel will retire in March 2026, after recently stepping down from his role as President. Elizabeth A. McDonald, known for her deep experience in the oil and gas sector, has already taken over as President and Chief Operating Officer and is expected to be named CEO next year. The board’s quick move and vote of confidence in McDonald highlight their intent to keep the company’s strategic direction steady through this transition. This leadership change comes at a time when SM Energy’s share price has seen mixed momentum. The stock is down 33% so far this year and has dropped about 31% over the past 12 months. Even with some modest gains in the past month and recent improvement over three years, long-term returns remain underwhelming compared to the broader market. It is clear that while the new leadership brings industry credibility, the market has not fully shaken off concerns about growth and earnings going forward. The question now is whether this transition is a fresh start for SM Energy, or if the current share price already reflects all the potential Ms. McDonald’s leadership could unlock. Has the market priced in future growth, or could there be an opening for investors looking for value?

Most Popular Narrative: 33.2% Undervalued

According to the most widely followed narrative, SM Energy is trading at a significant discount, making it appear undervalued relative to its calculated fair value under current market conditions and analyst projections.

The company's ability to increase both net proved reserves and net production by over 60% since 2020, while also improving production margins and keeping share count flat, demonstrates ongoing operational excellence and scale. This supports per-share financial growth and potential improvements in operating margins and earnings.

Curious how resilient production growth and some surprising assumptions about future financials are powering this undervalued call? The narrative’s math reveals a combination of margin shifts, steady discipline, and a notable increase in the valuation multiple. Want to see the full story behind these bold projections? There is more beneath the surface. Dive deeper into the numbers that shape this compelling outlook.

Result: Fair Value of $40.00 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, logistical challenges in the Uinta Basin and heavy reliance on just a few shale regions could threaten SM Energy's projected growth path.

Find out about the key risks to this SM Energy narrative.

Another View: Discounted Cash Flow Perspective

Looking from another angle, our DCF model also points to SM Energy being undervalued based on projected future cash flows and discounted back to today. However, does this model capture all the shifting industry dynamics?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out SM Energy for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own SM Energy Narrative

If you see the numbers differently or want to dig deeper, you can craft your own view of SM Energy’s story in just a few quick steps. Do it your way

A great starting point for your SM Energy research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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