SM Energy (SM): Taking a Fresh Look at Valuation After a Recent Share Price Bounce

SM Energy (SM) has quietly outperformed the broader energy space over the past month, with the stock up about 11% even after a rough past 3 years for shareholders.

See our latest analysis for SM Energy.

The recent 10.85% 1 month share price return looks more like a bounce than a full reversal, given the steep year to date share price decline and weak 1 year total shareholder return.

If SM Energy has you rethinking your exposure to cyclicals, it could be a good moment to explore aerospace and defense stocks as a different source of potential opportunities.

With earnings still growing, a strong five year track record, and the stock trading at a steep discount to analyst targets, is SM Energy quietly undervalued, or is the market already pricing in all the future upside?

Most Popular Narrative: 39% Undervalued

With SM Energy last closing at 20.43 dollars against a narrative fair value of 33.50 dollars, the story leans firmly toward significant upside potential.

The analysts have a consensus price target of $40.0 for SM Energy based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $59.0, and the most bearish reporting a price target of just $27.0.

Read the complete narrative.

Curious how modestly shrinking margins can still support a richer future earnings multiple, even as growth cools and discount rates edge lower? Unpack the full narrative to see which specific revenue path, profitability reset, and valuation re rating assumptions are doing the heavy lifting behind that higher fair value.

Result: Fair Value of $33.50 (UNDERVALUED)

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

However, concentrated exposure to just a few shale basins and potential Uinta takeaway bottlenecks could quickly undermine the margin and valuation story that investors are banking on.

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

Build Your Own SM Energy Narrative

If you see the outlook differently or simply prefer to dive into the numbers yourself, you can build a personalized view in minutes: 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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