SM Energy is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids in onshore North America. The company was founded in 1908 and is based in Denver, Colorado.
SM Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for SM Energy Co. To summarize, we found that SM Energy Co ranked in the 77th percentile in terms of potential gain offered. Moreover, under all the scenarios we modelled, the output consistently forecasted positive returns. In terms of the factors that were most noteworthy in this DCF analysis for SM, they are:
29% of the company's capital comes from equity, which is greater than just 8.27% of stocks in our cash flow based forecasting set.
SM Energy Co's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -4.4. This coverage rate is greater than that of just 13.02% of stocks we're observing for the purpose of forecasting via discounted cash flows.
The weighted average cost of capital for the company is 16. This value is greater than 84.17% stocks in the Energy sector that generate free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
BOOM, ENLC, REGI, HESM, and TTI can be thought of as valuation peers to SM, in the sense that they are in the Energy sector and have a similar price forecast based on DCF valuation.
Shares of SM Energy (NYSE: SM) rallied more than 10% by 3:45 p.m. EST on Monday. Fueling the oil stock was an analyst upgrade. An analyst from RBC Capital upgraded shares of SM Energy from sector perform to outperform.
Shares of energy company Antero Resources (NYSE: AR) rose roughly 12% within the first hour of trading on Jan. 5. There wasn't any material news out of any of these exploration and production companies, but that doesn't mean there was no news to consider. Antero, Kosmos, and SM Energy all share one important trait: Their top and bottom lines fluctuate with the ups and downs of the commodities they produce.