Is SM Energy Co. overvalued or undervalued?

As of 21 February 2025, the valuation grade for SM Energy Co. has moved from fair to attractive, indicating a positive shift in its perceived value. The company is currently considered undervalued, with a P/E ratio of 3, significantly lower than the industry average, suggesting strong potential for growth. Additionally, the Price to Book Value stands at 0.65, and the EV to EBITDA ratio is 2.76, both of which reinforce the undervaluation narrative.
In comparison to peers, SM Energy Co. has a P/E ratio of 3.892 and an EV to EBITDA of 2.9342, indicating that it is trading at a discount relative to its competitors. Notably, the PEG ratio of 0.89 further highlights its attractive valuation, as it suggests that the stock is priced favorably in relation to its earnings growth. Despite recent underperformance against the S&P 500, with a year-to-date return of -33.90% compared to the index's 2.44%, the fundamentals suggest that SM Energy Co. presents a compelling investment opportunity at its current price of 25.62.