Company Overview
SM Energy Company operates as an independent energy entity focused on the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids across the United States. The company maintains working interests in oil and gas producing wells within the Midland Basin, South Texas, Uinta Basin, and DJ regions, positioning it within the Energy sector and the Oil & Gas E&P industry. As of the latest data, the firm has a market capitalization of $7.80B, generates annual revenue of $3.03B, and employs 1241 individuals to execute its operational strategy. These valuation and revenue figures indicate that SM Energy Company holds a significant position in the independent exploration and production landscape, managing substantial asset bases to generate cash flow from upstream operations.
Financial Health
The company reported revenue of $3.03B, net income of $648.00M, and EBITDA of $2.21B over the trailing twelve months. The substantial gap between revenue and net income reveals a high-efficiency cost structure where gross margins of 90.4% allow a large portion of top-line revenue to remain before operating expenses are deducted. Operating margins stand at 26.9%, while profit margins reach 21.4%, indicating that the company retains a robust portion of its earnings after all corporate and tax obligations. Free cash flow stands at $206.88M, which provides the necessary financial flexibility to fund capital expenditures, reduce debt obligations, or return capital to shareholders without requiring external equity financing. On the balance sheet, total cash of $368.00M is compared against total debt of $2.85B, resulting in a debt-to-equity ratio of 59.31% that characterizes a moderately leveraged position typical for capital-intensive energy exploration. The current ratio is 0.69, indicating that short-term liquid assets are currently lower than short-term liabilities, which suggests a reliance on operating cash flows to meet immediate obligations rather than a large liquid cash buffer. Return on Equity is 14.3% and Return on Assets is 7.0%, metrics that reveal management effectiveness in generating profits from shareholder equity and total asset utilization respectively.
Valuation Assessment
The trailing P/E ratio is 5.80, while the forward P/E is 5.81, implying that the market expects earnings to remain relatively stable or grow slightly in the near term given the near-identical valuation multiples. The price-to-book ratio is 0.78, indicating that the company is trading at a discount to its book value, which suggests the market values its assets conservatively or anticipates specific sector headwinds. Alternative valuation metrics include a price-to-sales ratio of 2.58 and an EV/EBITDA of 4.66, which suggest the stock is valued on a low multiple relative to sales and enterprise value, reflecting the cyclical nature of the commodity market. The 52-week high is $33.16 and the 52-week low is $17.45, placing the current trading range within a wide band that reflects high volatility inherent to the oil and gas sector. With a beta of 0.99, the stock exhibits price volatility that closely mirrors the broader market, meaning it does not significantly amplify or dampen market movements compared to the S&P 500 index.
Growth & Income
Revenue growth year-over-year is -17.1% and earnings growth year-over-year is -42.3%, indicating that earnings are shrinking at a much faster rate than revenue due to likely declines in commodity prices or volume rather than operational inefficiency. The company offers a dividend yield of 2.5% with a payout ratio of 17.7%, a low payout ratio that suggests the dividend is highly sustainable even during periods of declining earnings or reduced cash flow generation. Given the current contraction in earnings, the low payout ratio ensures that the company is not over-leveraging its cash flow to maintain the dividend, preserving capital for essential upstream activities. The overall growth and income profile presents a mature energy asset with significant dividend yield supported by low payout ratios but currently facing headwinds in revenue and earnings growth trajectories.