It has been about a month since the last earnings report for SM Energy (SM). Shares have added about 31% in that time frame, outperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is SM Energy due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
SM Energy Q2 Earnings Beat Estimates, Revenues Rise Y/Y
SM Energy reported second-quarter 2026 adjusted earnings of $2.19 per share, up 46.0% from $1.50 a year ago. The figure beat the Zacks Consensus Estimate of $1.93 by 13.47%. Total revenues of $2.50 billion surged 215.3% year over year and topped the consensus mark of roughly $2 billion by 24.54%.
The strong quarterly results were backed by impressive oil equivalent production and pricing.
SM Energy Production and Pricing Strengthen
Second-quarter production totaled 40 million barrels of oil equivalent, up from 19 million a year earlier. Oil volumes were 20.9 million barrels, while gas production was 86.8 billion cubic feet and NGL volumes were 4.6 million barrels.
The average realized price before derivatives was $53.86 per Boe, up 30.5% year over year. Oil realizations rose to $96.85 per barrel from $62.04, while natural gas realizations fell to 17 cents per Mcf from $2.15.
SM Keeps Costs in Focus
Lease operating expense was $6.71 per Boe, up 21.6% from the prior-year quarter. Transportation costs declined 13.6% to $3.57 per Boe, while G&A expense per Boe fell 10.4% to $1.98.
SM reported $1.4 billion of adjusted EBITDAX and $526 million of adjusted net income. Capital expenditures before changes in accruals were $717 million, below the company's second-quarter guidance of $815 to $855 million, mainly due to drilling and completion timing.
SM Strengthens Cash Flow and Balance Sheet
Operating cash flow was $1.1 billion, while adjusted free cash flow reached $467 million. SM returned $137 million to stockholders, comprising $84 million of share repurchases and $53 million of dividends.
SM cut net debt by roughly $1.1 billion during the quarter, bringing the balance down to about $6.25 billion. Proceeds from the $950 million South Texas asset sale helped fund the retirement of $819 million of notes due in 2026. After quarter-end, the company also moved to redeem the remaining $417 million of 2027 notes, pushing its next senior-note maturity out to mid-2028.
SM Energy Raises Second-Half Production View
SM raised second-half 2026 total production guidance to 435 to 440 MBoe/D from 430 MBoe/D, with oil output expected at approximately 238 thousand barrels per day. Full-year production guidance was narrowed to 418 to 423 MBoe/D, including oil volumes of 223 to 225 thousand barrels per day.
For the third quarter, total production is projected at 430 to 440 MBoe/D and oil production at 230 to 240 thousand barrels per day. SM maintained full-year capital guidance of $2.65 to $2.85 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 13.13% due to these changes.
VGM Scores
At this time, SM Energy has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock has a score of A on the value side, putting it in the top quintile for value investors.
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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, SM Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
SM Energy is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, CNX Resources Corporation. (CNX), a stock from the same industry, has gained 7.5%. The company reported its results for the quarter ended June 2026 more than a month ago.
CNX Resources reported revenues of $389.43 million in the last reported quarter, representing a year-over-year change of -13.5%. EPS of $0.72 for the same period compares with $0.59 a year ago.
CNX Resources is expected to post earnings of $0.61 per share for the current quarter, representing a year-over-year change of +24.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for CNX Resources. Also, the stock has a VGM Score of C.
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This article originally published on Zacks Investment Research (zacks.com).
