A month has gone by since the last earnings report for SM Energy (
SM Quick Quote SM - Free Report) . Shares have lost about 13% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is SM Energy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
SM Energy Beats on Q4 Earnings Estimates
SM Energy’s fourth-quarter 2022 adjusted earnings of $1.29 per share beat the Zacks Consensus Estimate of $1.21. The bottom line significantly improved from the year-ago earnings of $1.14 per share.
Total quarterly revenues of $671 million declined from $855 million in the year-ago quarter but beat the Zacks Consensus Estimate of $600 million.
The strong quarterly earnings were driven by higher average realized oil prices and lower operating expenses.
Operational Performance: Production
SM Energy’s fourth-quarter production totaled 142.9 thousand barrels of oil equivalent per day (MBoe/d) (46% oil), down 10% from the year-ago level of 158.3 MBoe/d.
Oil production of SM Energy declined 27% year over year to 62 thousand barrels per day (MBbls/d). The company produced 348.9 million cubic feet per day of natural gas in the quarter, up 3% year over year. Natural gas liquids contributed 22.7 MBbls/d to the total production volume, up 32%.
Before the effects of derivative settlements, the average realized price per Boe was $50.92 compared with $58.54 in the year-ago quarter. The average realized price of natural gas declined 29% year over year to $4.52 per thousand cubic feet. Average realized oil prices increased 8% to $82.35 per barrel, while that of natural gas liquids declined 34% to $26.10 per barrel.
Costs & Expenses
On the cost front, unit lease operating expenses of SM Energy increased 24% year over year to $5.20 per Boe. General and administrative expenses declined 2% to $2.50 per Boe from the prior year's $2.55. Also, transportation expenses increased to $2.86 per Boe from $2.61.
Total hydrocarbon production expenses of SM Energy in the quarter were $150.7 million compared with the year-ago level of $143.3 million. Total exploration expenses were $10.8 million, lower than the year-ago figure of $12.6 million.
Total operating expenses in the fourth quarter declined to $328.7 million from the year-ago period’s $380.5 million.
The capital expenditure of SM Energy in the December-end quarter was $288.1 million. It generated an adjusted free cash flow of $79.9 million in the reported quarter.
As of Dec 31, 2022, SM Energy had cash and cash equivalents of $445 million. It had net debt of $1,140.1 million at the fourth-quarter end.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -11.51% due to these changes.
At this time, SM Energy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, SM Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.