SM
SM Energy Company
$28.28
Oil & Gas E&P
85%
FCF at Price Deck × Multiple
Moderate
·
Conviction
Overvalued
Trading 22.5% above fair value
You pay
$28.28
Bear
$4.38
Fair
$23.09
Bull
$48.05
Bear
$4.38
-84.5%
FCF $401M × 8x
Fair
$23.09
-18.4%
FCF $573M × 11x
Bull
$48.05
+69.9%
FCF $745M × 14x
Key Value Driver
Oil price assumption ($75/bbl base case)
Implied Market Multiple
16.2x
Summary
Our base-case estimate uses a valuation based on free cash flow under different commodity price assumptions and a valuation multiple. We then blend that result with the average analyst price target of $36.40 from 54 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $23.09 per share.
Warnings
Debt per share ($10.37) is significant relative to the stock price. Even small changes in the debt figure meaningfully shift what each share is worth.
If oil drops to $60/barrel, the stock could fall -89%. 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 $36.40 (from 54 analysts). Our estimate is 56% 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