Analysts at the firm believe that enhanced completion designs in the company's Eagle Ford shale operations are leading to better well returns.
The company itself raised 2014 production guidance 3% to 53.5 - 54.9 MMBOE, ahead of Barclays' own 53.5% MMBOE estimates.
Separately, TheStreet Ratings team rates SM ENERGY CO as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SM ENERGY CO (SM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 2.4%. Since the same quarter one year prior, revenues rose by 21.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The gross profit margin for SM ENERGY CO is currently very high, coming in at 72.70%. It has increased significantly from the same period last year. Along with this, the net profit margin of 8.88% is above that of the industry average.
- SM ENERGY CO's earnings per share declined by 22.1% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SM ENERGY CO turned its bottom line around by earning $2.52 versus -$0.84 in the prior year. This year, the market expects an improvement in earnings ($6.79 versus $2.52).
- SM's debt-to-equity ratio of 0.92 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that SM's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.70 is low and demonstrates weak liquidity.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has decreased by 21.9% when compared to the same quarter one year ago, dropping from $76.52 million to $59.78 million.
- You can view the full analysis from the report here: SM Ratings Report
EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he and Stephanie Link think could be potentially HUGE winners. Click here to see the holdings for FREE.