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Is SM Energy (SM) a Great Value Stock Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

SM Energy (SM - Free Report) is a stock many investors are watching right now. SM is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 5.88, which compares to its industry's average of 10.25. Over the past year, SM's Forward P/E has been as high as 8.92 and as low as 4.96, with a median of 6.42.

Another notable valuation metric for SM is its P/B ratio of 1.47. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.49. Over the past 12 months, SM's P/B has been as high as 1.64 and as low as 1.14, with a median of 1.40.

Finally, investors should note that SM has a P/CF ratio of 3.77. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. SM's P/CF compares to its industry's average P/CF of 7.87. Over the past year, SM's P/CF has been as high as 4.21 and as low as 2.43, with a median of 3.10.

These are only a few of the key metrics included in SM Energy's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SM looks like an impressive value stock at the moment.


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