SM
SM Energy Company
$38.04
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Strong
·
Conviction
Overvalued
Trading 72.0% above fair value
You pay
$38.04
Bear
$6.17
Fair
$22.12
Bull
$43.39
Bear
$6.17
-83.8%
FCF $496M × 8x
Fair
$22.12
-41.8%
FCF $708M × 11x
Bull
$43.39
+14.1%
FCF $920M × 14x
Adjust Assumptions
75.0$/bbl
11.0x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
16.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (54 analysts)
$36.73
Divergence from AlphaVal
40%
Summary
At $75/bbl oil with a 11x EV/FCF multiple, intrinsic value is $22.12 per share. Range: $6.17 (bear) to $43.39 (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 $36.73 (from 54 analysts). Our estimate is 40% 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