Yahoo Finance Why Is SM Energy (SM) Up 18.1% Since Last Earnings Report?
It has been about a month since the last earnings report for SM Energy (SM). Shares have added about 18.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is SM Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
SM Energy Q4 Earnings Top Estimates, Revenues Decline Y/Y
SM Energy Company reported fourth-quarter 2023 adjusted earnings of $1.56 per share, which surpassed the Zacks Consensus Estimate of $1.39. The bottom line increased from the year-ago quarter’s earnings of $1.29 per share.
Total quarterly revenues of $608.7 million declined from $671.3 million in the year-ago quarter and missed the Zacks Consensus Estimate of $612 million.
Strong quarterly earnings resulted from higher oil equivalent production volumes and declining hydrocarbon production expenses.
Operational Performance:
Production
SM Energy’s fourth-quarter production totaled 153.5 thousand barrels of oil equivalent per day (MBoe/d) (almost 43% oil), up 7% from the year-ago level of 142.9 MBoe/d. The reported figure marginally outpaced the Zacks Consensus Estimate of 153 MBoe/d.
Oil production of SM Energy increased 6% year over year to 66 thousand barrels per day (MBbls/d) and surpassed the Zacks Consensus Estimate of 65 MBbls/d.
The company produced 364.1 million cubic feet per day of natural gas in the quarter, up 4% year over year. Natural gas liquids contributed 26.7 MBbls/d to the total production volume, which jumped 18%.
Realized Prices
Before the effects of derivative settlements, the average realized price per Boe was $42.99 compared with $50.92 in the year-ago quarter. The average realized oil price plunged 6% to $77.41 per barrel. The Zacks Consensus Estimate of $80 per barrel for oil price also reflects a year-over-year decline.
The average realized price of natural gas declined 45% year over year to $2.47 per thousand cubic feet, while that for natural gas liquids fell 16% to $21.92 per barrel.
Costs & Expenses
On the cost front, unit lease operating expenses of SM Energy increased 2% year over year to $5.31 per Boe. General and administrative expenses increased 4% to $2.60 per Boe from the prior year's $2.50. Transportation expenses slipped 27% to $2.08 per Boe.
Total hydrocarbon production expenses of SM Energy in the quarter were $137.3 million compared with the year-ago level of $150.7 million. Total exploration expenses were $15.8 million, higher than the year-ago figure of $10.8 million.
Capex
The capital expenditure of SM Energy in the December-end quarter was $222.7 million. It generated an adjusted free cash flow of $156 million in the reported quarter.
Balance Sheet
As of Dec 31, 2023, SM Energy had cash and cash equivalents of $616.2 million. It had a net debt of $969 million at the fourth-quarter end.
Guidance
For the first quarter of 2024, SM Energy projects production of 13 MMBoe. Of the total production, oil will probably contribute 43-44%.
In 2024, the company anticipates net production volumes of 56-59 million barrels of oil equivalent (MMBoe), with oil comprising 44% of the total. This projection suggests a 3-4% year-over-year increase in production.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted -8.27% due to these changes.
VGM Scores
Currently, SM Energy has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, SM Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
SM Energy is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Diamondback Energy (FANG), a stock from the same industry, has gained 10%. The company reported its results for the quarter ended December 2023 more than a month ago.
Diamondback reported revenues of $2.23 billion in the last reported quarter, representing a year-over-year change of +9.8%. EPS of $4.74 for the same period compares with $5.29 a year ago.
Diamondback is expected to post earnings of $4.23 per share for the current quarter, representing a year-over-year change of +3.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -4.8%.
Diamondback has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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