Few Indicators Flashing Warning Signs for SM Energy Company (SM)

Let’s reassess the active stocks with an eye toward SM stock. Just how should we respond to Tuesday’s drubbing? Is the mighty fruit now destined to decay? Or is this a mere bruising and nothing more? On 05 February, shares of SM Energy Company (NYSE:SM) closed lower after a volatile session. The shares dropped -0.62 points or -3.18 percent at $18.85 with a heavy trade volume of 3.2 million shares. After opening the session at $19.37, the shares went as high as $19.41 and as low as $18.36, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $2.08 billion and now has 110.13 million shares outstanding. SM Energy Company (SM) stock has gained 13.35 percent of market value in 21 trading days.

SM stock has a trailing 3-year beta of 3.11, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $0.95 a share in the trailing twelve months. The stock’s value has surged 21.77 percent year to date (YTD) against a decline of -18.22 percent in 12 month’s time. The company’s shares still trade -44.16 percent away from its 1-year high of $33.76 and 43.35 percent up from 52-week low of $13.15. The average consensus rating on the company is 2.2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

SM Energy Company (SM) will probably climb 38.46 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $41 price as 12-month high target. This represents a whopping 117.51 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $26.5, which represents a return potential of 40.58 percent when compared to the closing price of the stock of $18.85 on Tuesday, February 05. The lowest price target for the stock is $17 — slightly more than -9.81 percent from SM’s current share price.

History has shown that shares in SM Energy Company have gone down on 19 different earnings reaction days and are predicted to add 0.05 percent when the company reports upcoming earnings. Investors will get their next glimpse of SM’s Q4 earnings on February 20. Analysts are forecasting revenue to climb 17.5 percent to $400M in the fiscal fourth quarter, while earnings are seen soaring by nearly -50 percent to -$0.04 per share. It earned -$0.01 per share, worse than the $0.16, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $459M, better than the $422M analysts expected. Earnings are estimated to increase by 79.6 percent this year, 146.49 percent next year and continue to increase by 0 percent annually for the next 5 years.

Let’s take a look at some insider activity at SM Energy Company (NYSE:SM) and see the pattern. The earliest insider trade took place on 06/08/2017. Vogel Herbert S gathered a total of 3 thousand shares of company at average share price of $16.6. The total for the purchase was set at $49.8 thousand. After this transaction, the EVP – Operations account balance stood at 35.04 thousand shares. The stock grew 13.55 percent since that insider purchase. On 06/08/2017, Ottoson Javan D, President & CEO, purchased 2 thousand shares at a price per share of $16.44. This added 32.88 thousand shares to the insider’s fortune and the stock saw a 14.66 percent rally in value since the news became public. This transaction left 145.1 thousand shares in the President & CEO account.

On 03/13/2017, EVP – Operations Vogel Herbert S performed a purchase transaction worth $21.84 thousand. This purchase at $21.84 each has added 1 thousand shares into the insider’s portfolio position. Meanwhile, shares have recorded -13.69 percent decrease since the transaction was reported. The insider now is left with 32.04 thousand shares remaining in the account. Robeson Rose M, who performs the Director job, bought 1 thousand shares for $23.36 thousand. The acquisition occurred on 03/08/2017 was priced at $23.36 per share. The share price plunged -19.31 percent since the reporting date. Robeson Rose M now left with a stake of 17.38 thousand SM stock worth $327.63 thousand after the insider buying.

The stock is currently hovering around the first support level of $18.34. Below this, the next support is placed in the zone of $17.82. Till the time, the SM stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 46.25 on daily chart, which may remain a cause for concern. If the price breaks below $17.82 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $19.39 mark may result into a pull-back move towards $19.92 level.

Shares of SM Energy Company (SM) are trading at a P/E ratio of 21.59 times earnings reported for the past 12 months. The industry SM operates in has an average P/E of 16.71. Its P/E ratio went as low as 3.94X and as high as 33.06 over the 5-year span.Further, it is sporting a 1.31 on the Price-to-Sales ratio. Compare this with the industry average P/S of 99.8. 69.2 percent is the gross profit margin for SM Energy Company and operating margin sits at 17.6 percent. Along with this, the net profit margin is 10.9 percent.