SM Energy Company (SM) was reported 3.62% up in market trading on Tuesday. In a press release on July 30, the company updated on the operating and financial results for the Q2 of 2020 and also highlighted the 2020 operating plan.
The capital expenditures were dropped to 26% below the previously announced guidance plan. The company adjusted its capital expenditures from $170.9 million with a total decrease of $45.7 million totaled $125.2 million. The net cash obtained from the operating activities was $114.3 million before the net change in working capital of $38.7 million totaled $153.1 million. Moreover, SM has reduced its 2020 capital expenditures to a further $610 to 630 million in order to control its cost and prioritize cash flow and leverage metrics in the coming time.
At $2.86 per share, the company is currently around -74.56% down year to date in the stock market. At the time of writing, SM Energy Company (SM) has a market cap of $381.21 million. The average transaction volume for SM over the past month (5462155 shares per day) is trailing its average daily volume over the past year by -10.49, which suggests market participants have been less active in this stock of late.
SM Energy Company (SM) has been in rally mode, as indicated by the relationship between its 200-day and 20-day major moving averages. That said, over the past 30 days, SM shares have fallen -71.35%. The stock has moved down -70.18 over the trailing 12 months, falling behind the rest of the market by 330.82%. It has also trailed competitors and similar names by -64.56%.
Looking at Key Indicators
Naturally, a cursory survey of superficial price points from the chart don’t say a whole lot about where SM shares could be headed. That’s why we need to dig a little deeper and check out what some of the most important momentum indicators seem to be saying.
The relationship between changes in price and the underlying strength or weakness over periods can point out deeper factors in the pattern that can often generate insights for technical analysts through momentum factors. Two of our favorite oscillating indicators are the Relative Strength Index (RSI) and the Stochastic %k Oscillator. In each case, the scoring is on a scale somewhere between 0 and 100, and in case, the levels to watch are “70” and “30”, with the former representing an “overbought” state and the latter presenting an “oversold” state.
With that in mind, here is a look at SM shares from this perspective. The 20-day RSI reading for SM is currently 41.17, which indicates that is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. If we look at the 20-day Stochastic %k measure, we find it at 22.47, which represents another indication of a oversold outlook.
Listening to the Analysts
On average, Street analysts put their recommendation at 2.90, which is scored on a scale from 1 to 5, with 1 representing a “Strong Buy” and 5 representing a “Strong Sell”.
That suggests analysts are neutral on SM looking ahead over the coming 12 months.
Assessing the Risk
Risk is an essential factor in comprehensive investment analysis. One of the key factors that analysts consider in determining the systemic risk involved in a stock is called “beta”, which represents an individual stock’s volatility relative to the volatility demonstrated by stocks as an asset class, in general, as a function of broad market data.
SM, for example, trades right now with a beta of 5.61. The rest of the market is normalized to a beta score of 1.0, which means SM is more volatile than the average stock. By the same token, SM should be seen as somewhat more risky for market participants than the average stock.
We would also note that SM has posted average daily volatility over the past two weeks of 113.73%, or 62.43% less than it has scored on the same measure over the past hundred days.
The Fundamentals in Focus
As we now turn to the fundamental picture, we begin by analyzing it the way one might analyze a building: by starting with the foundation – the balance sheet. Without a strong foundation, the rest of the structure can’t stand.
For SM, cash levels are currently sitting at 10000.0. That figure is balanced by 307.9 million in current liabilities. To further round out the picture, total assets are at 5.27 billion and total liabilities sit at 2.99 billion, granting a pretty thorough ground-up sense of the company and how it might withstand challenges ahead, should they appear.
In terms of recent free cash flow, SM, is currently reporting 22.26 million, which represents a quarterly net change of 0.0 in cash flowing in the door. In terms of operations, the company reported 332.47 million in net operating cash flow.
Looking at the revenue path, we saw last quarter’s top-line number come in at 169.63 million in total revenues, which represents a y/y quarterly change of 58.34, and a sequential quarterly sales decline of -58.30%.
That brings us to the real meat of the matter: the bottom line. SM Energy Company (SM) yielded a gross basic income of -312.68 million, which comes on a Cost-of-Goods-Sold number registering at 482.31 million, seated in 113.01 billion total diluted outstanding shares, adding up to earnings per share of -3.73. Notably, the consensus view of analysts looking ahead to next quarter is currently at -0.18.
That allows us to round out this picture with a look at valuations. Based on this data, and the forecasts we have at hand, the coming fiscal year looks to be headed toward -2.15 in total earnings per share.
However, estimates are only guesses about the future. Both business and investment trends are more important to take into consideration.