As of May 23, 2025, SM Energy Co has a Discounted Cash Flow (DCF) derived fair value of $105.27 per share. With the current market price at $23.18, this represents a potential upside of 354.2%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $99.72 |
| DCF Fair Value (10-year) | $105.27 |
| Potential Upside (5-year) | 330.2% |
| Potential Upside (10-year) | 354.2% |
| Discount Rate (WACC) | 7.1% - 9.5% |
Revenue is projected to grow from $2690 million in 12-2024 to $5758 million by 12-2034, representing a compound annual growth rate of approximately 7.9%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 2690 | 13% |
| 12-2025 | 3318 | 23% |
| 12-2026 | 3317 | 0% |
| 12-2027 | 3393 | 2% |
| 12-2028 | 3699 | 9% |
| 12-2029 | 4035 | 9% |
| 12-2030 | 4296 | 6% |
| 12-2031 | 4671 | 9% |
| 12-2032 | 5036 | 8% |
| 12-2033 | 5381 | 7% |
| 12-2034 | 5758 | 7% |
Net profit margin is expected to improve from 29% in 12-2024 to 29% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 770 | 29% |
| 12-2025 | 950 | 29% |
| 12-2026 | 950 | 29% |
| 12-2027 | 972 | 29% |
| 12-2028 | 1059 | 29% |
| 12-2029 | 1155 | 29% |
| 12-2030 | 1230 | 29% |
| 12-2031 | 1338 | 29% |
| 12-2032 | 1442 | 29% |
| 12-2033 | 1541 | 29% |
| 12-2034 | 1649 | 29% |
with a 5-year average of $1325 million. Projected CapEx is expected to maintain at approximately 55% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 1579 |
| 12-2026 | 1807 |
| 12-2027 | 2004 |
| 12-2028 | 2191 |
| 12-2029 | 1951 |
| 12-2030 | 2058 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 27 |
| Days Inventory | 0 |
| Days Payables | 48 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 2132 | 181 | 1367 | (17) | 601 |
| 2026 | 3071 | 242 | 1822 | 5 | 1003 |
| 2027 | 3297 | 247 | 1864 | 21 | 1166 |
| 2028 | 3600 | 269 | 2031 | 1 | 1298 |
| 2029 | 3489 | 294 | 2216 | 19 | 960 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 99.72 | 330.2% |
| 10-Year DCF (Growth) | 105.27 | 354.2% |
| 5-Year DCF (EBITDA) | 82.56 | 256.2% |
| 10-Year DCF (EBITDA) | 103.68 | 347.3% |
Is SM Energy Co (SM) a buy or a sell? SM Energy Co is definitely a buy. Based on our DCF analysis, SM Energy Co (SM) appears to be significantly undervalued with upside potential of 354.2%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $23.18.