SMC

We rate Summit Midstream Corp (SMC) as a Reduce with a composite score of 41.8/100 at a current price of $29.14. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in value (46th percentile) and momentum (43th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (20th percentile) and quality (25th percentile) tempers our overall conviction. We assign a No Moat rating (26/100), Very High uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress; sustainability of the current growth rate; the path to profitability. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Summit Midstream Corp holds a top-quartile position (#0 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 41.8/100 places it at rank #3316 in our full 7,333-stock universe. At $252M in market capitalization, Summit Midstream Corp is a small-cap player in the Transportation, Communications, Electric, Gas, And Sanitary Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 43%, though momentum at the 43th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 74% (+18.4pp vs sector) narrow to operating margins of 12% (-5.1pp vs sector) and net margins of -47.3%, yielding a gross-to-net conversion rate of -64%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $29.14, Summit Midstream Corp is trading near fair value based on current fundamentals. Our value factor score of 46/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at EV/EBITDA of 22.0x (at a premium), P/B of 0.4x, P/S of 0.7x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Very High uncertainty rating to Summit Midstream Corp. The stock exhibits multiple compounding risk factors: significant leverage (113% debt-to-equity), current negative profitability (net margin -47.3%), below-average price stability (34th percentile). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: significant leverage (113% debt-to-equity); current negative profitability (net margin -47.3%); below-average price stability (34th percentile); weak quality scores (25th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 34th percentile and quality factor at the 25th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 74% provide a buffer against cost pressures. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Summit Midstream Corp's capital allocation as Poor. Key concerns include low returns on equity (-20.1%), negative profitability, weak asset returns (ROA -8.0%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Summit Midstream Corp significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Summit Midstream Corp receives a Reduce rating with a composite score of 41.8/100 (rank #3316 of 7,333). Our quantitative framework assigns a No Moat (26/100, trend: stable), Very High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 34/100.

Our analysis does not support a constructive view on Summit Midstream Corp at this time. The combination of limited competitive advantages, very high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.