Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin27.0%
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin-22.7%
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Financial Health
F
Years to Pay Off Debt-23.8 yrs
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt-$9.3B
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital-$2.6B
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Valuation
B
Price-to-Book0.95x
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Cash Flow
A
Free Cash Flow$85M
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
Owner Earnings$652M
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
About SM Energy Company
SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids in the United States. The company holds working interests in oil and gas producing wells in the Midland Basin, South Texas, Uinta Basin, and DJ Basin. The company was formerly known as St. Mary Land & Exploration Company and changed its name to SM Energy Company in May 2010. SM Energy Company was founded in 1908 and is headquartered in Denver, Colorado.
SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids in the United States. The company holds working interests in oil and gas producing wells in the Midland Basin, South Texas, Uinta Basin, and DJ Basin. The company was formerly known as St. Mary Land & Exploration Company and changed its name to SM Energy Company in May 2010. SM Energy Company was founded in 1908 and is headquartered in Denver, Colorado.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Net Income From Continuing Operation Net Minority Interest
-335,000
108,978
Reconciled Depreciation
432,000
318,738
Reconciled Cost Of Revenue
860,000
525,621
EBITDA
135,000
503,071
EBIT
-297,000
184,333
Net Interest Income
-113,000
-41,252
Interest Expense
113,000
43,129
Interest Income
1,877
783
Normalized Income
234,449
53,851
Net Income From Continuing And Discontinued Operation
-335,000
108,978
Total Expenses
1,078,000
591,402
Total Operating Income As Reported
-298,000
182,322
Diluted Average Shares
199,000
115,000
Basic Average Shares
199,000
115,000
Diluted EPS
0
0
Basic EPS
0
0
Diluted NI Availto Com Stockholders
-335,000
108,978
Net Income Common Stockholders
-335,000
108,978
Net Income
-335,000
108,978
Net Income Including Noncontrolling Interests
-335,000
108,978
Net Income Continuous Operations
-335,000
108,978
Tax Provision
-75,000
32,226
Pretax Income
-410,000
141,204
Other Income Expense
-696,000
71,563
Other Non Operating Income Expenses
1,000
451
Gain On Sale Of Security
-697,000
71,429
Net Non Operating Interest Income Expense
-113,000
-41,252
Interest Expense Non Operating
113,000
43,129
Interest Income Non Operating
1,877
783
Operating Income
399,000
110,893
Operating Expense
218,000
65,781
Other Operating Expenses
44,000
25,534
Selling General And Administration
174,000
40,247
General And Administrative Expense
174,000
40,247
Other Gand A
174,000
40,247
Gross Profit
617,000
176,674
Cost Of Revenue
860,000
525,621
Total Revenue
1,477,000
702,295
Operating Revenue
1,477,000
702,295
Balance Sheet
2026
2025
2024
Ordinary Shares Number
239,697
114,631
Share Issued
239,697
114,631
Net Debt
7,527,000
2,347,000
Total Debt
7,976,000
2,715,000
Tangible Book Value
6,868,000
4,810,000
Invested Capital
14,844,000
7,525,000
Working Capital
-2,609,000
-358,000
Net Tangible Assets
6,868,000
4,810,000
Common Stock Equity
6,868,000
4,810,000
Total Capitalization
13,609,000
7,106,000
Total Equity Gross Minority Interest
6,868,000
4,810,000
Stockholders Equity
6,868,000
4,810,000
Gains Losses Not Affecting Retained Earnings
1,000
1,000
Other Equity Adjustments
1,000
1,000
Retained Earnings
2,903,000
3,291,000
Additional Paid In Capital
3,962,000
1,517,000
Capital Stock
2,000
1,000
Common Stock
2,000
1,000
Total Liabilities Net Minority Interest
12,276,000
4,443,000
Total Non Current Liabilities Net Minority Interest
7,996,000
3,274,000
Other Non Current Liabilities
461,000
102,000
Derivative Product Liabilities
2,000
2,000
Non Current Deferred Liabilities
315,000
724,000
Non Current Deferred Taxes Liabilities
315,000
724,000
Long Term Debt And Capital Lease Obligation
6,741,000
2,296,000
Long Term Debt
6,741,000
2,296,000
Long Term Provisions
477,000
150,000
Current Liabilities
4,280,000
1,169,000
Other Current Liabilities
824,000
60,000
Current Debt And Capital Lease Obligation
1,235,000
419,000
Current Debt
1,235,000
419,000
Other Current Borrowings
1,235,000
419,000
Pensionand Other Post Retirement Benefit Plans Current
49,000
46,000
Payables And Accrued Expenses
2,221,000
641,000
Current Accrued Expenses
245,000
280,000
Interest Payable
78,000
80,000
Payables
396,000
435,000
Other Payable
27,000
42,000
Dividends Payable
23,000
23,000
Total Tax Payable
269,000
287,000
Accounts Payable
77,000
83,000
Total Assets
19,144,000
9,253,000
Total Non Current Assets
17,473,000
8,442,000
Other Non Current Assets
1,011,000
234,000
Financial Assets
27,000
6,000
Net PPE
16,435,000
8,202,000
Accumulated Depreciation
-7,968,000
-8,868,000
Gross PPE
24,403,000
17,070,000
Construction In Progress
835,000
458,000
Other Properties
198,000
128,000
Current Assets
1,671,000
811,000
Other Current Assets
106,000
29,000
Hedging Assets Current
201,000
83,000
Receivables
915,000
331,000
Other Receivables
212,000
262,000
Duefrom Related Parties Current
119,000
98,000
Accounts Receivable
915,000
Cash Cash Equivalents And Short Term Investments
449,000
368,000
Cash And Cash Equivalents
449,000
368,000
Cash Flow
2026
2025
2024
Free Cash Flow
85,000
223,152
Repurchase Of Capital Stock
-224
-2,065
Repayment Of Debt
-823,000
0
Issuance Of Debt
1,000,000
500
Issuance Of Capital Stock
1,073
1,357
Capital Expenditure
-555,000
-228,760
Interest Paid Supplemental Data
95,000
-163,100
Income Tax Paid Supplemental Data
19,281
End Cash Position
449,000
368,000
Beginning Cash Position
368,000
162,251
Changes In Cash
81,000
205,749
Financing Cash Flow
69,000
-21,937
Cash Flow From Continuing Financing Activities
69,000
-21,937
Net Other Financing Charges
-26,000
-62
-10,598
Proceeds From Stock Option Exercised
0
Cash Dividends Paid
-82,000
-23,224
Common Stock Dividend Paid
-82,000
Net Common Stock Issuance
849
-708
Common Stock Payments
-224
-2,065
Common Stock Issuance
1,073
1,357
Net Issuance Payments Of Debt
177,000
500
Net Long Term Debt Issuance
177,000
500
Long Term Debt Payments
-823,000
0
Long Term Debt Issuance
1,000,000
500
Investing Cash Flow
-628,000
-224,226
Cash Flow From Continuing Investing Activities
-628,000
-224,226
Net Other Investing Changes
-24,000
4,534
7,056
Net Business Purchase And Sale
-49,000
Purchase Of Business
-49,000
Net PPE Purchase And Sale
-12,496
-2,102,841
Purchase Of PPE
-12,496
-2,102,841
Capital Expenditure Reported
-555,000
-216,264
Operating Cash Flow
640,000
451,912
Cash Flow From Continuing Operating Activities
640,000
451,912
Change In Working Capital
-31,000
28,867
Other Non Cash Items
-63,000
25,871
Stock Based Compensation
25,000
8,036
Deferred Tax
-85,000
32,851
Deferred Income Tax
-85,000
32,851
Depreciation Amortization Depletion
432,000
318,738
Operating Gains Losses
697,000
-71,429
Gain Loss On Investment Securities
697,000
-71,429
Net Income From Continuing Operations
-335,000
108,978
📊Quarterly mode — Graham Fair Value & 7 Criteria require annual data. Switch to Annual for full analysis.
Quarter vs Same Quarter Last Year
YoY strips seasonality
Revenue Growth (YoY)
Prior year: $840M▲ $1.5B+75.8%
Revenue growth vs same quarter last year strips seasonality. Consistent double-digit growth is a Buffett hallmark.
Gross Margin
Prior year: 41.1%▲ 41.8%+0.7pp
Buffett: consistent gross margin above 40% signals durable pricing power and competitive moat.
Operating Margin
Prior year: 47.5%▲ 27.0%-20.5pp
Graham: operating margin reflects true business economics before financing. Trend matters as much as level.
Net Margin
Prior year: 21.7%▼ -22.7%-44.3pp
Net margin can be distorted by one-time items, tax timing, or interest costs — compare to operating margin for signal quality.
Quarterly Health Checks
3 Graham/Buffett criteria that are valid and reliable on quarterly data
✅ Adequate Size
Graham required scale for resilience. Quarterly revenue × 4 gives an annualised proxy.
$1.5B/qtr (≈$5.9B ann.)
vs > $1.5B annualised revenue
❌ Financial Condition
Current assets vs current liabilities — a real-time liquidity snapshot. Valid and reliable on quarterly data.
0.39x current ratio
vs ≥ 2.0x
✅ Free Cash Flow
Buffett's most important single metric. A positive FCF quarter means the business generated real cash for owners after maintaining its asset base.
$85M
vs Positive
Operating Cash Flow
$640M
Latest quarter · Buffett's cash reality check
ROIC
2.1%
Based on latest annual operating income
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
Market Cap / Net Assets
0.9x
Net Assets: $6.9B
Asset Context — Oil & Gas E&P
Asset-heavy businesses (energy, industrials, utilities, REITs) have physical assets with real replacement value — book value and Net Assets are more meaningful here than for technology or consumer brand companies. A low Market Cap / Net Assets ratio may indicate genuine undervaluation.
⚠️Net margin compressed 44.3pp vs same quarter last year. Common causes: one-time charges (restructuring, write-downs, legal settlements), tax rate changes, or rising interest expense. Check the income statement notes before drawing conclusions about operating health.
⚠️Operating income is positive but net income is negative. This typically reflects below-the-line items: interest expense, impairment charges, tax adjustments, or one-time write-offs. The core business may be healthy — operating margin is a better signal of ongoing profitability here.
⚠️Revenue grew vs prior year but operating margin contracted. Possible explanations: deliberate investment in growth (hiring, marketing, R&D), input cost inflation, or pricing pressure from competition. Buffett distinguishes between spending that builds moat vs. spending that doesn't.
Peers & Industry
No auto-detected peers for Oil & Gas E&P. You can manually compare SM against any stock using the Compare tool.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
0.87%
Low — management has little skin in the game
Return on Equity (ROE)
-4.9%
Weak — poor returns on equity
Return on Assets (ROA)
-1.7%
Poor — assets are not generating adequate returns
Share Buybacks (Latest Year)
$13M
Management is returning capital to shareholders via buybacks
Debt Trend YoY
+193.8% YoY
Debt is growing — management is leveraging up
Leadership Team
Elizabeth Anne McDonald
President, CEO & Director
Age 46
Pay: $2,175,177
Wade Pursell
Executive VP & CFO
Age 60
Pay: $1,144,177
Blake Mckenna
Executive VP & COO
Age 38
Megan Hays
Vice President of Investor Relations
Julie Gray
Vice President of Marketing
Age 62
Top Institutional Holders
Institution
% Owned
Shares
Blackrock Inc.
16.03%
38,431,787
Vanguard Portfolio Management LLC
6.35%
15,234,489
Canada Pension Plan Investment Board
6.05%
14,493,791
State Street Corporation
5.21%
12,495,962
Aristeia Capital, LLC
4.52%
10,841,846
Vanguard Capital Management LLC
4.40%
10,537,773
Dimensional Fund Advisors LP
4.17%
9,995,353
American Century Companies Inc
3.72%
8,923,624
⚠️Current ratio below 1 — liquidity risk
Risk Analysis
Beta (Market Risk)
0.71
Low volatility — more stable than the market
Short Interest
6.3% of float
Moderate short interest
Debt-to-Equity
1.25x
Moderate leverage
Current Ratio
0.39x
Weak liquidity — current liabilities exceed current assets
52-Week Price Range
Low: $17.45Current: $27.14High: $35.88
Currently at 53% of 52-week range
SM Energy Company (SM) fundamental analysis — Overall grade C based on profitability, financial health, valuation and cash flow. Graham's
Fair Value: N/A (negative EPS). Gross profit margin: 41.8%. Operating margin: 27.0%. Net margin: -22.7%. Market cap: $6.5B. Sector: Energy. Industry: Oil & Gas E&P. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
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