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SM Energy Gears Up to Report Q1 Earnings: Time to Buy or Exit?
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Key Takeaways
SM reports May 6 after close; consensus EPS $1.29 (down 26.7% y/y) on $1.4B revenue.
SM's Q1 view leans on Permian and DJ production, but weak oil in Jan-Feb could weigh on results.
SM has surged 75.8% in six months and trades at 4.48x EV/EBITDA, below the industry average.
SM Energy Company (SM - Free Report) is set to report first-quarter 2026 results on May 6, after market close.
The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.29 per share, implying a 26.7% decline from the year-ago reported figure. SM has witnessed three upward and one downward earnings estimate revisions over the past 30 days. The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $1.4 billion, suggesting a 64.6% rise from the year-ago actuals.
SM beat the consensus estimate for earnings in each of the trailing four quarters, with an average surprise of 13.01%. This is depicted in the graph below:
Image Source: Zacks Investment Research
SM’s Q1 Earnings Whispers
Our proven model does not predict an earnings beat for SM this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors to Note for SM Energy
SM Energy is expected to have maintained a stable performance in the first quarter, supported by growing production from the oil-rich basins in the United States, including the Permian Basin and the Uinta Basin. However, since the company is mainly engaged in exploration and production activities, its financial performance is highly dependent on the commodity-pricing scenario.
Per the data from the U.S. Energy Information Administration, the average West Texas Intermediate (“WTI”) spot prices for January, February and March of this year were $60.04, $64.51 and $91.38 per barrel, respectively, compared with $75.74, $71.53 and $68.24 per barrel in the corresponding period of the previous year. While the conflict in the Middle East, which began at the end of February, rattled commodity markets and pushed oil prices higher, the sharp fall in oil prices in the first two months of the quarter may have hurt SM’s upstream profitability despite growing production levels.
These factors are likely to have affected demand and pricing dynamics, potentially hampering the company’s quarterly performance.
SM’s Price Performance & Valuation
SM’s stock has increased 75.8% over the past six months compared with the 38.5% rise of the composite stocks belonging to the industry. Matador Resources (MTDR - Free Report) and Chord Energy (CHRD - Free Report) , two other exploration and production players, have gained 71.6% and 75.6%, respectively.
Image Source: Zacks Investment Research
SM appears relatively undervalued considering a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 4.48X, below the broader industry average of 12.11X, implying that the stock is currently trading at a discount.
Image Source: Zacks Investment Research
Investment Thesis of SM Energy
SM Energy is a leading independent exploration and production player with a top-tier asset base spread across four premier shale basins in the United States. The company owns 240,000 net acres in the Permian, 340,000 net acres in the DJ Basin, 155,000 net acres in South Texas and 62,000 net acres in the Uinta Basin, offering exposure to high-margin basins with an oil-weighted production.
The all-stock merger with Civitas Resources has been a major positive, as it has enabled the company to expand its high-quality portfolio of assets. The company's plan for 2026 is to focus on free cash flow maximization and improving shareholder returns instead of pushing for production growth. This strategy is expected to enhance capital efficiency and offer better margins.
The current commodity pricing environment is extremely favourable for SM Energy, given that the majority of its production is oil. Per the data from oilprice.com, WTI crude is currently trading above $100 per barrel, which is expected to boost SM’s margins and cash flows. However, the company had previously mentioned that it plans to reduce capital expenditures in 2026, which may limit production growth. (See the Zacks Earnings Calendar to stay ahead of market-moving news.)
WTI Above $100 Per Barrel: Are MTDR and CHRD Poised to Gain?
Matador Resources is primarily engaged in exploration and production activities in the prolific Delaware Basin of the United States. Its earnings are supported by production growth in the oil-rich, high-quality acreages and its investment in midstream assets, including pipelines and processing plants, through its San Mateo unit.
Chord Energy is an independent exploration and production entity with a strong presence in the Williston Basin, where it operates a high-quality, oil-weighted resource. CHRD controls about 1.3 million net acres in the Williston Basin, with a net daily production of approximately 277 thousand barrels of oil equivalent per day as of Dec. 31, 2025.
Both Matador Resources and Chord Energy are well-positioned to benefit from the substantial rise in oil prices triggered by the conflict in the Middle East, supported by their oil-weighted production profiles.
Last Word
Considering the positive outlook, investors should consider buying SM Energy’s stock, which is currently trading at a discounted valuation.
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SM Energy Gears Up to Report Q1 Earnings: Time to Buy or Exit?
Key Takeaways
SM Energy Company (SM - Free Report) is set to report first-quarter 2026 results on May 6, after market close.
The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.29 per share, implying a 26.7% decline from the year-ago reported figure. SM has witnessed three upward and one downward earnings estimate revisions over the past 30 days. The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $1.4 billion, suggesting a 64.6% rise from the year-ago actuals.
SM beat the consensus estimate for earnings in each of the trailing four quarters, with an average surprise of 13.01%. This is depicted in the graph below:
SM’s Q1 Earnings Whispers
Our proven model does not predict an earnings beat for SM this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
The company has an Earnings ESP of -9.60%, and it currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors to Note for SM Energy
SM Energy is expected to have maintained a stable performance in the first quarter, supported by growing production from the oil-rich basins in the United States, including the Permian Basin and the Uinta Basin. However, since the company is mainly engaged in exploration and production activities, its financial performance is highly dependent on the commodity-pricing scenario.
Per the data from the U.S. Energy Information Administration, the average West Texas Intermediate (“WTI”) spot prices for January, February and March of this year were $60.04, $64.51 and $91.38 per barrel, respectively, compared with $75.74, $71.53 and $68.24 per barrel in the corresponding period of the previous year. While the conflict in the Middle East, which began at the end of February, rattled commodity markets and pushed oil prices higher, the sharp fall in oil prices in the first two months of the quarter may have hurt SM’s upstream profitability despite growing production levels.
These factors are likely to have affected demand and pricing dynamics, potentially hampering the company’s quarterly performance.
SM’s Price Performance & Valuation
SM’s stock has increased 75.8% over the past six months compared with the 38.5% rise of the composite stocks belonging to the industry. Matador Resources (MTDR - Free Report) and Chord Energy (CHRD - Free Report) , two other exploration and production players, have gained 71.6% and 75.6%, respectively.
Image Source: Zacks Investment Research
SM appears relatively undervalued considering a trailing 12-month enterprise value to EBITDA (EV/EBITDA) of 4.48X, below the broader industry average of 12.11X, implying that the stock is currently trading at a discount.
Image Source: Zacks Investment Research
Investment Thesis of SM Energy
SM Energy is a leading independent exploration and production player with a top-tier asset base spread across four premier shale basins in the United States. The company owns 240,000 net acres in the Permian, 340,000 net acres in the DJ Basin, 155,000 net acres in South Texas and 62,000 net acres in the Uinta Basin, offering exposure to high-margin basins with an oil-weighted production.
The all-stock merger with Civitas Resources has been a major positive, as it has enabled the company to expand its high-quality portfolio of assets. The company's plan for 2026 is to focus on free cash flow maximization and improving shareholder returns instead of pushing for production growth. This strategy is expected to enhance capital efficiency and offer better margins.
The current commodity pricing environment is extremely favourable for SM Energy, given that the majority of its production is oil. Per the data from oilprice.com, WTI crude is currently trading above $100 per barrel, which is expected to boost SM’s margins and cash flows. However, the company had previously mentioned that it plans to reduce capital expenditures in 2026, which may limit production growth. (See the Zacks Earnings Calendar to stay ahead of market-moving news.)
WTI Above $100 Per Barrel: Are MTDR and CHRD Poised to Gain?
Matador Resources is primarily engaged in exploration and production activities in the prolific Delaware Basin of the United States. Its earnings are supported by production growth in the oil-rich, high-quality acreages and its investment in midstream assets, including pipelines and processing plants, through its San Mateo unit.
Chord Energy is an independent exploration and production entity with a strong presence in the Williston Basin, where it operates a high-quality, oil-weighted resource. CHRD controls about 1.3 million net acres in the Williston Basin, with a net daily production of approximately 277 thousand barrels of oil equivalent per day as of Dec. 31, 2025.
Both Matador Resources and Chord Energy are well-positioned to benefit from the substantial rise in oil prices triggered by the conflict in the Middle East, supported by their oil-weighted production profiles.
Last Word
Considering the positive outlook, investors should consider buying SM Energy’s stock, which is currently trading at a discounted valuation.