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Relative valuation derived from Energy sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 50GRADE C+
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
16.2%
Sector: 6.7%
Dividend Analysis audit
INCOME
3.23%
Trailing Yield
$3.23
Per $100 Invested
Solid dividend yield for income-focused strategies.
Est. Payout Ratio
31%SAFE
Analyst Projections
Analyst Consensus
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Based on our 6-factor quantitative model, SM Energy Co (SM) receives a "Hold" rating with a composite score of 47.0/100, ranked #517 out of 4446 stocks. Key factor scores: Quality 50/100, Value 76/100, Momentum 44/100. This is quantitative analysis only — not investment advice.
SM Energy Co (SM) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does SM Energy Co Do?
SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids in the state of Texas. As of February 24, 2022, it had 492.0 million barrels of oil equivalent of estimated proved reserves. It also has working interests in 825 gross productive oil wells and 483 gross productive gas wells in the Midland Basin and South Texas. The company was formerly known as St. Mary Land & Exploration Company and changed its name to SM Energy Company in May 2010. SM Energy Company was founded in 1908 and is headquartered in Denver, Colorado. SM Energy Co (SM) is classified as a mid-cap stock in the Energy sector, specifically within the Petroleum And Natural Gas industry. The company is led by CEO Herbert S. Vogel and employs approximately 540 people, headquartered in Denver, Colorado. With a market capitalization of $7.0B, SM is one of the notable companies in the Energy sector.
SM Energy Co (SM) Stock Rating — Hold (April 2026)
As of April 2026, SM Energy Co receives a Hold rating with a composite score of 47.0/100 and 3 out of 5 stars from the Blank Capital Research quantitative model.SM ranks #517 out of 4,446 stocks in our coverage universe. Within the Energy sector, SM Energy Co ranks #64 of 128 stocks, placing it in the upper half of its Energy peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
SM Stock Price and 52-Week Range
SM Energy Co (SM) currently trades at $28.35. The stock gained $0.02 (0.1%) in the most recent trading session. The 52-week high for SM is $32.26, which means the stock is currently trading -12.1% from its annual peak. The 52-week low is $17.45, putting the stock 62.5% above its annual trough. Recent trading volume was 5.0M shares, reflecting moderate market activity.
Is SM Overvalued or Undervalued? — Valuation Analysis
SM Energy Co (SM) carries a value factor score of 76/100 in the Blank Capital model, suggesting the stock trades at a meaningful discount to its fundamental earning power. The trailing price-to-earnings ratio is 9.59x, compared to the Energy sector average of 19.63x — a discount of 51%. The price-to-book ratio stands at 1.55x, versus the sector average of 1.64x. The price-to-sales ratio is 2.42x, compared to 0.47x for the average Energy stock. On an enterprise value basis, SM trades at 6.51x EV/EBITDA, versus 3.50x for the sector.
Based on these multiples, SM Energy Co appears attractively valued relative to both its sector peers and the broader market. Value-oriented investors may find the current entry point compelling, particularly if the company's fundamental quality metrics also score well.
SM Energy Co Profitability — ROE, Margins, and Quality Score
SM Energy Co (SM) earns a quality factor score of 50/100, indicating solid business quality with consistent operational execution. The return on equity (ROE) is 16.2%, compared to the Energy sector average of 6.7%, which is within a healthy range. Return on assets (ROA) comes in at 8.4% versus the sector average of 3.7%.
On a margin basis, SM Energy Co reports gross margins of 72.0%, compared to 52.7% for the sector. The operating margin is 37.9% (sector: 10.7%). Net profit margin stands at 25.9%, versus 6.4% for the average Energy stock. Revenue growth is running at 27.9% on a trailing basis, compared to -1.2% for the sector. The overall profitability profile is adequate, though there may be room for margin expansion.
SM Debt, Balance Sheet, and Financial Health
SM Energy Co has a debt-to-equity ratio of 92.0%, compared to the Energy sector average of 55.0%. Leverage is within a manageable range for the industry, though investors should monitor debt trends over time. The current ratio is 0.69x, which may signal near-term liquidity tightness. Total debt on the balance sheet is $2.71B. Cash and equivalents stand at $162M.
SM has a beta of 1.41, meaning it is more volatile than the broader market — a $10,000 investment in SM would be expected to move 40.9% more than the S&P 500 on any given day. The stability factor score for SM Energy Co is 38/100, suggesting elevated price swings that may be unsuitable for conservative portfolios.
SM Energy Co Revenue and Earnings History — Quarterly Trend
In TTM 2026, SM Energy Co reported revenue of $3.09B and earnings per share (EPS) of $5.65. Net income for the quarter was $780M. Gross margin was 72.0%. Operating income came in at $1.15B.
In FY 2025, SM Energy Co reported revenue of $3.15B and earnings per share (EPS) of $5.65. Net income for the quarter was $648M. Revenue grew 17.2% year-over-year compared to FY 2024. Operating income came in at $1.00B.
In Q3 2025, SM Energy Co reported revenue of $812M and earnings per share (EPS) of $1.35. Net income for the quarter was $155M. Revenue grew 26.1% year-over-year compared to Q3 2024. Operating income came in at $246M.
In Q2 2025, SM Energy Co reported revenue of $793M and earnings per share (EPS) of $1.76. Net income for the quarter was $202M. Revenue grew 25.0% year-over-year compared to Q2 2024. Operating income came in at $295M.
Over the past 8 quarters, SM Energy Co has demonstrated a growth trajectory, with revenue expanding from $635M to $3.09B. Investors analyzing SM stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
SM Dividend Yield and Income Analysis
SM Energy Co (SM) currently pays a dividend yield of 3.2%. At this yield, a $10,000 investment in SM stock would generate approximately $$323.00 in annual dividend income. This compares to the Energy sector average dividend yield of 1.9%, meaning SM offers above-average income for its sector. With a net margin of 25.9%, the dividend appears well-covered by earnings, suggesting sustainable payouts going forward.
SM Momentum and Technical Analysis Profile
SM Energy Co (SM) has a momentum factor score of 44/100, reflecting neutral trend characteristics. The stock is neither significantly outperforming nor underperforming the broader market on a momentum basis. The investment factor score is 24/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 32/100 signals elevated short interest, which can indicate bearish sentiment among institutional investors.
SM vs Competitors — Energy Sector Ranking and Peer Comparison
Comparing SM against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full SM vs S&P 500 (SPY) comparison to assess how SM Energy Co stacks up against the broader market across all factor dimensions.
SM Next Earnings Date
No upcoming earnings date has been announced for SM Energy Co (SM) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy SM? — Investment Thesis Summary
SM Energy Co presents a balanced picture with arguments on both sides. The value score of 76/100 suggests attractive pricing relative to fundamentals. High volatility (stability score 38/100) increases portfolio risk.
In summary, SM Energy Co (SM) earns a Hold rating with a composite score of 47.0/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on SM stock.
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Institutional Research Dossier
SM Energy Co (SM) Deep Dive Analysis
Published on March 24, 2026
Action RatingHold
Sections
Executive Summary
SM Energy Co (SM) receives a Hold rating, driven by a mixed financial profile. While the company exhibits strong profitability metrics and trades at a discount to its sector on valuation multiples, its negative free cash flow and relatively high debt levels raise concerns about its long-term financial sustainability and capital allocation strategy. The current valuation appears to reflect these risks, justifying a neutral stance.
The company's focus on oil and gas exploration and production in Texas provides exposure to a volatile commodity market, further complicating the investment thesis. While SM Energy has demonstrated impressive revenue growth and margin expansion, its ability to maintain this performance in the face of fluctuating energy prices and increasing environmental scrutiny remains uncertain. Investors should closely monitor the company's cash flow generation, debt reduction efforts, and capital expenditure plans before considering a more bullish or bearish position.
Business Strategy & Overview
SM Energy operates as an independent energy company focused on the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids, primarily in Texas. The company's strategy centers on maximizing shareholder value through efficient resource development and disciplined capital allocation. This involves targeting high-return drilling opportunities in the Midland Basin and South Texas, where it holds significant acreage positions. SM Energy aims to optimize production through technological advancements and operational efficiencies, while also managing costs to maintain profitability in a cyclical industry.
A key aspect of SM Energy's strategy is its focus on maintaining a strong balance sheet and financial flexibility. The company actively manages its debt levels and seeks to generate free cash flow to fund future growth opportunities and return capital to shareholders. This involves hedging strategies to mitigate price volatility and disciplined capital expenditure planning to ensure that investments generate attractive returns. The company's management team has emphasized a commitment to capital discipline and sustainable value creation.
SM Energy's competitive landscape is characterized by numerous independent and major energy companies operating in the Permian Basin and other shale plays. The company competes for access to acreage, capital, and skilled labor. Its ability to differentiate itself depends on its operational expertise, cost structure, and ability to identify and develop high-quality resources. The company's focus on specific geographic areas allows it to develop specialized knowledge and expertise, providing a competitive advantage.
The company's product pipeline consists of its existing proved reserves and potential drilling locations. SM Energy continuously evaluates its portfolio of assets and seeks to optimize its development plan based on market conditions and technological advancements. The company's ability to successfully execute its drilling program and bring new production online is critical to its long-term growth prospects. The company also explores opportunities to acquire additional acreage and expand its resource base.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
27.9%
Sector: -1.2%
-2485% VS SCTR
Economic Moat Analysis
SM Energy's economic moat is assessed as None. The oil and gas exploration and production industry is highly competitive, with limited opportunities for companies to establish sustainable competitive advantages. While SM Energy possesses certain advantages, such as its acreage position in the Permian Basin and its operational expertise, these are not sufficient to create a significant barrier to entry or protect its profitability over the long term.
The company's assets are primarily commodity-based, meaning that its products are largely undifferentiated and subject to price fluctuations. This limits its ability to command premium pricing or generate excess returns. While SM Energy can improve its cost structure through operational efficiencies, these improvements can be easily replicated by competitors. The company's intangible assets, such as its technical expertise and reputation, are not strong enough to create a significant competitive advantage.
Network effects are not relevant in the oil and gas industry, as the value of the company's products does not increase as more customers use them. Switching costs are also low, as customers can easily switch between different suppliers of oil and gas. Efficient scale is not a significant factor, as the industry is characterized by numerous players of varying sizes. While SM Energy may benefit from economies of scale in certain areas, such as drilling and production, these benefits are not sufficient to create a sustainable competitive advantage.
The absence of a significant economic moat exposes SM Energy to intense competition and price volatility. The company's profitability is highly dependent on commodity prices, which are influenced by global supply and demand factors that are beyond its control. This makes it difficult for the company to generate consistent returns and protect its market share. Investors should be aware of the risks associated with investing in a company with no economic moat.
Financial Health & Profitability
SM Energy's financial health presents a mixed picture. The company has demonstrated strong revenue growth, with TTM revenue of $3.15 billion, representing a 27.9% increase compared to the sector average of -1.7%. This growth is further evidenced by the quarterly revenue figures, showing consistent performance throughout FY2025. However, the company's free cash flow is a significant concern, with a TTM figure of -$2.04 billion. This negative free cash flow raises questions about the company's ability to fund its operations and growth initiatives without relying on external financing.
The company's profitability metrics are strong, with a TTM net income of $648.00 million and an EBITDA of $1.00 billion. The company's ROE of 16.2% significantly exceeds the sector average of 6.9%, indicating efficient use of equity. Gross margin of 72.0%, operating margin of 37.9%, and net margin of 25.9% also outperform the sector averages of 55.1%, 10.6%, and 6.3%, respectively. These strong profitability metrics suggest that SM Energy is effectively managing its costs and generating healthy profits from its operations.
However, SM Energy's balance sheet exhibits a relatively high level of debt. The company's total debt stands at $2.71 billion, with a debt-to-equity ratio of 92.00, which is higher than the sector average of 55.00. This high debt level increases the company's financial risk and could limit its ability to invest in future growth opportunities. The company's current ratio of 0.69 indicates potential liquidity challenges, as its current assets are less than its current liabilities.
Analyzing the quarterly financial history reveals a trend of fluctuating operating margins. While the operating margin has generally remained strong, it has varied from quarter to quarter, reflecting the volatility of the energy market. The company's ability to maintain consistent profitability in the face of fluctuating commodity prices will be crucial to its long-term financial health. The negative free cash flow is a persistent concern that needs to be addressed through improved operational efficiency and disciplined capital allocation.
Valuation Assessment
SM Energy's valuation presents a compelling case for value investors, but requires careful consideration of its financial health. The company's P/E ratio of 5.3x is significantly lower than the sector average of 19.5x, suggesting that the stock is undervalued relative to its earnings. Similarly, its EV/EBITDA ratio of 1.8x is substantially below the sector average of 3.5x, further indicating a potential undervaluation. These multiples suggest that the market is discounting SM Energy's earnings and cash flow potential.
However, the company's negative free cash flow complicates the valuation picture. While the company's earnings multiples may appear attractive, the lack of free cash flow raises concerns about its ability to generate sustainable returns for shareholders. Investors should carefully evaluate the reasons for the negative free cash flow and assess whether it is a temporary issue or a more persistent problem. The company's management team needs to demonstrate a clear plan for improving cash flow generation.
Compared to its historical valuation, SM Energy's current multiples are relatively low. This could be due to a number of factors, including concerns about the company's debt levels, the volatility of the energy market, and the uncertainty surrounding future commodity prices. Investors should consider these factors when assessing the company's valuation and determine whether the current discount is justified.
Overall, SM Energy's valuation appears to be attractive based on its earnings multiples, but the negative free cash flow and high debt levels warrant caution. The stock may be suitable for value investors who are willing to accept the risks associated with the energy sector and the company's financial profile. However, investors should closely monitor the company's cash flow generation and debt reduction efforts before considering a more bullish position. The current Hold rating reflects the balanced view of the company's valuation and financial health.
Risk & Uncertainty
SM Energy faces several specific risks that could negatively impact its business and financial performance. The most significant risk is its exposure to commodity price volatility. The prices of oil, natural gas, and natural gas liquids are subject to fluctuations based on global supply and demand factors, geopolitical events, and weather conditions. A decline in commodity prices could significantly reduce the company's revenue and profitability, potentially leading to financial distress.
Another key risk is the company's high debt levels. SM Energy's debt-to-equity ratio of 92.00 is relatively high compared to its peers, increasing its financial risk. The company's ability to service its debt obligations depends on its ability to generate sufficient cash flow. A decline in commodity prices or an increase in interest rates could strain the company's finances and potentially lead to a default.
Regulatory risks also pose a threat to SM Energy's business. The oil and gas industry is subject to extensive regulations related to environmental protection, safety, and permitting. Changes in regulations could increase the company's operating costs and limit its ability to develop its resources. Increased scrutiny of hydraulic fracturing, or fracking, could also negatively impact the company's operations.
Competition is another significant risk. The oil and gas industry is highly competitive, with numerous companies vying for access to acreage, capital, and skilled labor. SM Energy competes with both large integrated oil companies and smaller independent producers. Increased competition could put pressure on the company's margins and limit its growth prospects. The company's concentration in the Midland Basin and South Texas also exposes it to geographic-specific risks, such as pipeline constraints and local regulatory changes.
Bulls Say / Bears Say
The Bull Case
BULL VIEWSM Energy's discounted valuation, particularly its low P/E and EV/EBITDA ratios compared to the sector, presents a compelling buying opportunity for value investors.
BULL VIEWThe company's strong revenue growth and high operating margins demonstrate its operational efficiency and ability to generate profits even in a volatile commodity environment.
BULL VIEWSM Energy's strategic focus on the Permian Basin, a prolific oil and gas region, positions it for long-term growth and resource development.
The Bear Case
BEAR VIEWSM Energy's negative free cash flow and high debt levels raise serious concerns about its financial sustainability and ability to fund future growth.
BEAR VIEWThe company's heavy reliance on volatile commodity prices exposes it to significant downside risk, potentially eroding its profitability and financial health.
BEAR VIEWIncreased regulatory scrutiny and potential restrictions on hydraulic fracturing could significantly impact SM Energy's operations and future development plans.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score SM and 4,400+ other equities.
SM Energy Co exhibits a 111% valuation premium relative to institutional benchmarks. This represents a potential valuation overextension based on current multiples.
Return on Assets
Efficiency of asset utilization
8.4%
Sector: 3.7%
Gross Margin
Pricing power and cost efficiency
72.0%
Sector: 52.7%
Operating Margin
Core business profitability
37.9%
Sector: 10.7%
Net Margin
Bottom-line profitability
25.9%
Sector: 6.4%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
Sector Avg Yield1.89%
Yield Delta+71%
Income Projection audit
A $10,000 investment would generate approximately $323 annually in dividends at the current trailing rate.
