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SM Energy Posts 2Q16 Earnings: Why Is It Doing So Well?

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SM Energy Posts 2Q16 Earnings: Why Is It Doing So Well? PART 1 OF 6

SM Energy Posts 2Q16 Earnings: Better Than Wall Street Expected

SM Energy beats 2Q16 EPS estimates

SM Energy (SM) announced its 2Q16 earnings on August 2, 2016, after the Market closed. It reported an adjusted loss of $0.44 per share, which was $0.24 better than Wall Street analysts’ consensus for a loss of $0.68 per share.

SM Energy’s 2Q16 EPS (earnings per share) is lower by $0.93 compared to its 2Q15 profit of $0.49 per share. But when compared sequentially with 1Q16, its EPS is higher by $0.39 per share.

SM Energy Posts 2Q16 Earnings: Better Than Wall Street Expected

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SM Energy’s 2Q16 revenues miss estimates

For 2Q16, SM reported adjusted revenues of ~$291 million, which is ~16% lower than Wall Street analysts’ consensus of ~$348 million. Revenues were lower by ~34% compared to 2Q15 revenues of ~$441 million. Even when compared sequentially with 1Q16, revenues are lower by ~19%.

SM Energy’s earnings trend

As you can see in the above graph, SM Energy reported much lower EPS in 2015 due to lower realized crude oil (USO) and natural gas (UNG) prices. In 3Q15, the company saw its adjusted earnings turn negative for the first time since 2009.

Since 2013, SM Energy has beaten earnings expectations ~43% of the time. Other upstream players such as Southwestern Energy (SWN), ConocoPhillips (COP), and EOG Resources (EOG) have beaten earnings expectations ~57%, ~64%, and ~92% of the time, respectively, for the same period

In this series

We’ve looked at SM Energy’s 2Q16 earnings and revenue performance. In the rest of this series, we’ll look at its 2Q16 cash flow, operational performance, and analyst ratings. We’ll also look at its price forecast using implied volatility and see how SM stock has reacted in the past after beating earnings estimates.

First, let’s take a look at how much cash SM Energy generated in 2Q16.

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