Why SM Energy (SM) is getting a closer look now

SM Energy (SM) has been drawing fresh attention after a period of mixed share performance, including a 1 day decline and softer returns over the past year alongside positive 5 year total returns.

At a last close of US$18.93, the US based oil and gas producer shows a value score of 5, annual revenue of US$3.17b and net income of US$727.3m. This is prompting questions about how investors might view its current pricing.

Recent trading has been softer, with a 1 day share price return of 2.77% decline and a 1 year total shareholder return of 47.48% decline. However, the 5 year total shareholder return of 71.71% gain points to stronger longer term momentum from earlier periods.

If SM Energy has you reassessing your energy exposure, it could be a good moment to widen your search and check out aerospace and defense stocks as a different corner of the market.

With SM Energy trading at US$18.93 alongside a value score of 5 and an intrinsic discount estimate of 93%, you might ask yourself: is this stock quietly undervalued, or is the market already pricing in its future growth?

Most Popular Narrative: 39.7% Undervalued

Compared with SM Energy's last close of $18.93, the most followed narrative points to a fair value of $31.42, using an 8.14% discount rate.

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, allowing for per share financial growth and potential improvements in operating margins and earnings.

Curious what kind of revenue path, margin profile, and future earnings multiple are being used to justify that fair value gap and discount rate? The narrative spells out those assumptions in detail, along with how they tie back to production volumes and capital allocation choices.

Result: Fair Value of $31.42 (UNDERVALUED)

However, that story can change quickly if Uinta Basin bottlenecks squeeze realized prices or if shale decline rates demand heavier spending in order to hold production flat.

Build Your Own SM Energy Narrative

If you see the story differently or prefer to work from the raw numbers yourself, you can build a custom view in just a few 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.