NYSE:SM

Stock Analysis Report

Executive Summary

SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of crude oil and condensate, natural gas, and natural gas liquids in onshore North America.

Rewards

Trading at 94.5% below its fair value

Earnings are forecast to grow 58.56% per year

Earnings grew by 30.4% over the past year

Risk Analysis

Interest payments are not well covered by earnings

Highly volatile share price over past 3 months



Snowflake Analysis

Very undervalued with solid track record.


Similar Companies

Share Price & News

How has SM Energy's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SM's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

10.0%

SM

1.7%

US Oil and Gas

0.3%

US Market


1 Year Return

-53.5%

SM

-10.0%

US Oil and Gas

18.5%

US Market

Return vs Industry: SM underperformed the US Oil and Gas industry which returned -10% over the past year.

Return vs Market: SM underperformed the US Market which returned 18.5% over the past year.


Shareholder returns

SMIndustryMarket
7 Day10.0%1.7%0.3%
30 Day-6.8%-2.6%1.5%
90 Day-17.9%-1.6%5.7%
1 Year-53.1%-53.5%-6.7%-10.0%21.1%18.5%
3 Year-74.6%-75.0%-12.3%-20.3%45.9%36.4%
5 Year-69.7%-70.4%-7.3%-21.1%71.4%52.5%

Price Volatility Vs. Market

How volatile is SM Energy's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is SM Energy undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SM ($9.14) is trading below our estimate of fair value ($164.84)

Significantly Below Fair Value: SM is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SM is good value based on its PE Ratio (4.6x) compared to the Oil and Gas industry average (9.9x).

PE vs Market: SM is good value based on its PE Ratio (4.6x) compared to the US market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: SM is good value based on its PEG Ratio (0.1x)


Price to Book Ratio

PB vs Industry: SM is good value based on its PB Ratio (0.4x) compared to the US Oil and Gas industry average (0.8x).


Next Steps

Future Growth

How is SM Energy forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

58.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SM's forecast earnings growth (58.6% per year) is above the savings rate (1.7%).

Earnings vs Market: SM's earnings (58.6% per year) are forecast to grow faster than the US market (14.2% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: SM's revenue (6.5% per year) is forecast to grow slower than the US market (7.4% per year).

High Growth Revenue: SM's revenue (6.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SM is forecast to be unprofitable in 3 years.


Next Steps

  • Explore growth companies in the Energy industry.

Past Performance

How has SM Energy performed over the past 5 years?

-0.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SM has high quality earnings.

Growing Profit Margin: SM's current net profit margins (15.3%) are higher than last year (11.3%).


Past Earnings Growth Analysis

Earnings Trend: SM has become profitable over the past 5 years, growing earnings by -0.7% per year.

Accelerating Growth: SM's earnings growth over the past year (30.4%) exceeds its 5-year average (-0.7% per year).

Earnings vs Industry: SM earnings growth over the past year (30.4%) exceeded the Oil and Gas industry -15.6%.


Return on Equity

High ROE: SM's Return on Equity (7.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is SM Energy's financial position?


Financial Position Analysis

Short Term Liabilities: SM's short term assets ($311.1M) do not cover its short term liabilities ($491.0M).

Long Term Liabilities: SM's short term assets ($311.1M) do not cover its long term liabilities ($3.1B).


Debt to Equity History and Analysis

Debt Level: SM's debt to equity ratio (96.2%) is considered high.

Reducing Debt: SM's debt to equity ratio has reduced from 102% to 96.2% over the past 5 years.

Debt Coverage: SM's debt is well covered by operating cash flow (27.8%).

Interest Coverage: SM's interest payments on its debt are not well covered by EBIT (3x coverage).


Balance Sheet

Inventory Level: SM has a high level of physical assets or inventory.

Debt Coverage by Assets: SM's debt is not covered by short term assets (assets are 0.1x debt).


Next Steps

Dividend

What is SM Energy's current dividend yield, its reliability and sustainability?

1.09%

Current Dividend Yield


Dividend Yield vs Market

company1.1%marketbottom25%1.4%markettop25%3.7%industryaverage4.2%forecastin3Years0.8%

Current dividend yield vs market & industry

Notable Dividend: SM's dividend (1.09%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.42%).

High Dividend: SM's dividend (1.09%) is low compared to the top 25% of dividend payers in the US market (3.7%).


Stability and Growth of Payments

Stable Dividend: SM's dividends per share have been stable in the past 10 years.

Growing Dividend: SM's dividend payments have not increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (5%), SM's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of SM's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of SM Energy's salary, the management and board of directors tenure and is there insider trading?

5.1yrs

Average management tenure


CEO

Jay Ottoson (60yo)

4.8yrs

Tenure

US$6,953,524

Compensation

Mr. Javan D. Ottoson, also known as Jay, has been the Chief Executive Officer of SM Energy Company since February 01, 2015 and has been its President since October 2012. Mr. Ottoson served as the Chief Ope ...


CEO Compensation Analysis

Compensation vs Market: Jay's total compensation ($USD6.95M) is above average for companies of similar size in the US market ($USD2.63M).

Compensation vs Earnings: Jay's compensation has been consistent with company performance over the past year.


Management Age and Tenure

5.1yrs

Average Tenure

57yo

Average Age

Experienced Management: SM's management team is seasoned and experienced (5.1 years average tenure).


Board Age and Tenure

6.3yrs

Average Tenure

62yo

Average Age

Experienced Board: SM's board of directors are considered experienced (6.3 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUS$24,81330 May 19
Herbert Vogel
EntityIndividual
Role
Chief Operating Officer
Chief Operating Officer
Shares2,000
Max PriceUS$12.41
BuyUS$127,12128 May 19
David Copeland
EntityIndividual
Role
Chief Legal Officer
Executive VP
Shares10,000
Max PriceUS$12.71
BuyUS$73,15008 May 19
Javan Ottoson
EntityIndividual
Role
Chief Executive Officer
President
Shares5,000
Max PriceUS$14.63

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • A. Pursell (54yo)

    Executive VP & CFO

    • Tenure: 11.3yrs
    • Compensation: US$3.03m
  • Jay Ottoson (60yo)

    President

    • Tenure: 4.8yrs
    • Compensation: US$6.95m
  • David Copeland (62yo)

    Executive VP

    • Tenure: 8.9yrs
    • Compensation: US$1.71m
  • Newt Newton (63yo)

    Senior VP & Regional Manager of Permian Region

    • Tenure: 12.5yrs
    • Compensation: US$1.42m
  • David Whitcomb (56yo)

    Vice President of Marketing

    • Tenure: 11.3yrs
    • Compensation: US$919.15k
  • Herb Vogel (58yo)

    Chief Operating Officer

    • Tenure: 5.3yrs
    • Compensation: US$3.13m
  • Mary Lutey (47yo)

    Senior VP and Regional Manager of South Texas & Gulf Coast

    • Tenure: 4.6yrs
    • Compensation: US$1.20m
  • Jennifer Samuels

    Vice President of Investor Relations

    • Tenure: 4.6yrs
  • Candace Lyon

    Vice President of Human Resources

    • Tenure: 1.9yrs
  • Patrick Lytle (38yo)

    Controller

    • Tenure: 1.1yrs

Board Members

  • Rose Robeson (59yo)

    Independent Director

    • Tenure: 5.4yrs
    • Compensation: US$292.01k
  • Ramiro Peru (63yo)

    Independent Director

    • Tenure: 5.3yrs
    • Compensation: US$270.01k
  • Bill Sullivan (62yo)

    Independent Chairman of the Board

    • Tenure: 0yrs
    • Compensation: US$385.03k
  • Loren Leiker (65yo)

    Independent Director

    • Tenure: 7.3yrs
    • Compensation: US$270.01k
  • Larry Bickle (73yo)

    Independent Director

    • Tenure: 24.9yrs
    • Compensation: US$270.01k
  • Julio Quintana (59yo)

    Independent Director

    • Tenure: 13.4yrs
    • Compensation: US$288.41k
  • Jay Ottoson (60yo)

    President

    • Tenure: 4.8yrs
    • Compensation: US$6.95m
  • Stephen Brand (70yo)

    Independent Director

    • Tenure: 8.8yrs
    • Compensation: US$285.01k
  • Carla Bailo (58yo)

    Independent Director

    • Tenure: 1.2yrs
    • Compensation: US$170.53k

Company Information

SM Energy Company's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: SM Energy Company
  • Ticker: SM
  • Exchange: NYSE
  • Founded: 1908
  • Industry: Oil and Gas Exploration and Production
  • Sector: Energy
  • Market Cap: US$906.243m
  • Shares outstanding: 112.86m
  • Website: https://www.sm-energy.com

Number of Employees


Location

  • SM Energy Company
  • 1775 Sherman Street
  • Suite 1200
  • Denver
  • Colorado
  • 80203
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SMNYSE (New York Stock Exchange)YesCommon StockUSUSDDec 1992
SJLDB (Deutsche Boerse AG)YesCommon StockDEEURDec 1992
0KZALSE (London Stock Exchange)YesCommon StockGBUSDDec 1992

Biography

SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of crude oil and condensate, natural gas, and natural gas liquids in onshore North Ame ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/08 23:45
End of Day Share Price2019/12/06 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.