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Here's Why You Should Buy SM Energy (SM) Stock Right Now
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SM Energy Company’s (SM - Free Report) stock has surged significantly over the past year. The company has also outperformed the Oil/Energy space, its subindustry and the S&P 500 composite during the same period.
Price Performance
Over the past year, SM Energy’s stock has surged 70.5% compared with the broader sector’s rise of 14.5% and the Zacks Oil and Gas-U.S. Exploration and Production industry’s growth of 14.4%. Above all, the S&P 500 has jumped nearly 18%.
Image Source: Zacks Investment Research
Given this outperformance, we believe that SM Energy is one of the best-positioned oil companies for sustainable production growth, underpinned by a robust business model. The company undoubtedly merits a place in your portfolio. Our confidence is further bolstered by its Zacks Rank #2 (Buy) rating.
Favorable Style Score
SM Energy has an impressive Value Score of B. Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score, combined with a solid Zacks Rank, are the best investment bets.
Robust Outlook
The Zacks Consensus Estimate for SM’s 2024 earnings is pegged at $6.63 per share, suggesting growth of 12.6% from the year-ago reported figure, while the same for revenues is $2.58 billion, implying a rise of 8.9%.
The consensus mark for 2025 earnings is pegged at $7.46 per share, indicating an improvement of 12.6%, while the same for revenues is pinned at $2.82 billion, hinting at a 9.2% year-over-year increase.
Impressive Earnings Surprise History
SM Energy’s bottom line outpaced estimates in the trailing four quarters, the average surprise being 13.8%.
Key Business Tailwinds
With an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions, SM Energy is set to expand its oil-focused operations in the coming years. The company holds approximately 155,000 net acres in South Texas, and operates two drilling rigs and one completion crew. In the Midland Basin, SM Energy controls 111,000 net acres, indicating a positive outlook for sustained oil production growth with favorable operating margins.
SM Energy has demonstrated promising results from its operations in the Austin Chalk region, driven by additional well drilling. Operating wells in the Austin Chalk allows the company to diversify its portfolio, mitigating risks associated with regional supply and demand fluctuations.
As of Apr 30, 2024, SM Energy’s 111 wells in the Austin Chalk region reached IP30 (Initial Production over 30 days), yielding approximately 46-77% liquid hydrocarbons. This development is expected to enhance investor value. Additionally, the company has an agreement to expand its Austin Chalk acreage by approximately 8,000 net acres through a drill-to-earn arrangement.
For 2024, SM Energy anticipates net production volumes of 57-60 million barrels of oil equivalent (MMBoe), with oil accounting for 44% of the total. This projection implies a 3-4% year-over-year increase in production.
Enterprise Products Partners (EPD - Free Report) is among the leading midstream energy players in North America. It has an extensive network of pipelines that spreads across more than 50,000 miles.
The Zacks Consensus Estimate for EPD’s 2024 and 2025 earnings per share (EPS) is pegged at $2.73 and $2.87, respectively. The company has a Zacks Style Score of A for Value and Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
ProPetro Holding Corporation (PUMP - Free Report) is an oilfield services provider operating primarily in the Permian Basin spread over West Texas and New Mexico. ProPetro’s strategic transition to next-generation equipment, including FORCE electric fleets, underscores its market leadership and cutting-edge technology.
The Zacks Consensus Estimate for PUMP’s 2024 and 2025 EPS is pegged at 67 cents and 83 cents, respectively. The company has a Zacks Style Score of A for Value and B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
USA Compression Partners, LP (USAC - Free Report) is one of the largest independent natural gas compression service providers across the United States in terms of fleet horsepower. USA Compression Partners earns its revenues from the overall horsepower use of natural gas transported rather than the price. As such, the partnership is largely insulated from fluctuations in commodity prices.
The Zacks Consensus Estimate for USAC’s 2024 and 2025 EPS is pegged at 77 cents and 98 cents, respectively. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
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Here's Why You Should Buy SM Energy (SM) Stock Right Now
SM Energy Company’s (SM - Free Report) stock has surged significantly over the past year. The company has also outperformed the Oil/Energy space, its subindustry and the S&P 500 composite during the same period.
Price Performance
Over the past year, SM Energy’s stock has surged 70.5% compared with the broader sector’s rise of 14.5% and the Zacks Oil and Gas-U.S. Exploration and Production industry’s growth of 14.4%. Above all, the S&P 500 has jumped nearly 18%.
Image Source: Zacks Investment Research
Given this outperformance, we believe that SM Energy is one of the best-positioned oil companies for sustainable production growth, underpinned by a robust business model. The company undoubtedly merits a place in your portfolio. Our confidence is further bolstered by its Zacks Rank #2 (Buy) rating.
Favorable Style Score
SM Energy has an impressive Value Score of B. Value Score helps find stocks that are undervalued. Back-tested results have shown that stocks with a favorable Value Score, combined with a solid Zacks Rank, are the best investment bets.
Robust Outlook
The Zacks Consensus Estimate for SM’s 2024 earnings is pegged at $6.63 per share, suggesting growth of 12.6% from the year-ago reported figure, while the same for revenues is $2.58 billion, implying a rise of 8.9%.
The consensus mark for 2025 earnings is pegged at $7.46 per share, indicating an improvement of 12.6%, while the same for revenues is pinned at $2.82 billion, hinting at a 9.2% year-over-year increase.
Impressive Earnings Surprise History
SM Energy’s bottom line outpaced estimates in the trailing four quarters, the average surprise being 13.8%.
Key Business Tailwinds
With an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions, SM Energy is set to expand its oil-focused operations in the coming years. The company holds approximately 155,000 net acres in South Texas, and operates two drilling rigs and one completion crew. In the Midland Basin, SM Energy controls 111,000 net acres, indicating a positive outlook for sustained oil production growth with favorable operating margins.
SM Energy has demonstrated promising results from its operations in the Austin Chalk region, driven by additional well drilling. Operating wells in the Austin Chalk allows the company to diversify its portfolio, mitigating risks associated with regional supply and demand fluctuations.
As of Apr 30, 2024, SM Energy’s 111 wells in the Austin Chalk region reached IP30 (Initial Production over 30 days), yielding approximately 46-77% liquid hydrocarbons. This development is expected to enhance investor value. Additionally, the company has an agreement to expand its Austin Chalk acreage by approximately 8,000 net acres through a drill-to-earn arrangement.
For 2024, SM Energy anticipates net production volumes of 57-60 million barrels of oil equivalent (MMBoe), with oil accounting for 44% of the total. This projection implies a 3-4% year-over-year increase in production.
Other Stocks to Consider
Investors interested in the energy sector may look at some other top-ranked companies mentioned below. The three companies also presently carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Enterprise Products Partners (EPD - Free Report) is among the leading midstream energy players in North America. It has an extensive network of pipelines that spreads across more than 50,000 miles.
The Zacks Consensus Estimate for EPD’s 2024 and 2025 earnings per share (EPS) is pegged at $2.73 and $2.87, respectively. The company has a Zacks Style Score of A for Value and Momentum. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
ProPetro Holding Corporation (PUMP - Free Report) is an oilfield services provider operating primarily in the Permian Basin spread over West Texas and New Mexico. ProPetro’s strategic transition to next-generation equipment, including FORCE electric fleets, underscores its market leadership and cutting-edge technology.
The Zacks Consensus Estimate for PUMP’s 2024 and 2025 EPS is pegged at 67 cents and 83 cents, respectively. The company has a Zacks Style Score of A for Value and B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
USA Compression Partners, LP (USAC - Free Report) is one of the largest independent natural gas compression service providers across the United States in terms of fleet horsepower. USA Compression Partners earns its revenues from the overall horsepower use of natural gas transported rather than the price. As such, the partnership is largely insulated from fluctuations in commodity prices.
The Zacks Consensus Estimate for USAC’s 2024 and 2025 EPS is pegged at 77 cents and 98 cents, respectively. The company has a Zacks Style Score of B for Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.