SM
SM Energy Company
$39.50
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Strong
·
Conviction
Overvalued
Trading 77.1% above fair value
You pay
$39.50
Bear
$6.22
Fair
$22.30
Bull
$43.73
Bear
$6.22
-84.2%
FCF $496M × 8x
Fair
$22.30
-43.5%
FCF $708M × 11x
Bull
$43.73
+10.7%
FCF $920M × 14x
Adjust Assumptions
75.0$/bbl
11.0x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
16.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (54 analysts)
$39.08
Divergence from AlphaVal
43%
Summary
At $75/bbl oil with a 11x EV/FCF multiple, intrinsic value is $22.30 per share. Range: $6.22 (bear) to $43.73 (bull).
Warnings
If oil drops to $60/barrel, the stock could fall -84%. Check whether the company can survive at low prices and still pay its dividend.
Where you think oil prices will settle long-term drives over 80% of this valuation. The biggest risk isn't the company itself — it's getting the commodity price wrong.
Wall Street's average price target is $39.08 (from 54 analysts). Our estimate is 43% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — commodity volumes do not compound
- Geopolitical premiums are real but historically temporary
- Reserve replacement ratio below 100% for 3 years is existential