Abstract

SM Energy Co will report fiscal fourth-quarter results on February 25, 2026, Post Market; our preview synthesizes last quarter’s actuals, current-quarter forecasts on revenue, margins, net profit and EPS, and prevailing institutional stances within the latest six-month news flow.

Market Forecast

Consensus for the current quarter implies revenue of $773.79 million, with adjusted EPS of 0.90 and EBIT of $162.26 million; forecasts point to year-over-year changes of -9.70% for revenue, -52.73% for EPS, and -48.86% for EBIT. Margin assumptions embedded in forecasts are cautious relative to last quarter’s baseline, with the gross margin to track below the prior 76.14% and net margin to remain compressed against the prior 19.92% given softer liquids pricing and lower realized hedging benefits. SM Energy Co’s main business remains oil, natural gas, and NGL production, which is expected to carry the quarter; the operating narrative centers on commodity price mix, well productivity, and capital discipline. Liquids-weighted volumes in Midland Basin development continue to represent the most promising profit driver, leveraging prior-cycle acreage quality; within the last quarter, the segment generated $811.01 million revenue, and outlook commentary implies a weaker year-over-year comparison this quarter.

Last Quarter Review

In the previous quarter, SM Energy Co reported revenue of $811.59 million, a gross profit margin of 76.14%, GAAP net profit attributable to shareholders of $155.00 million, a net profit margin of 19.92%, and adjusted EPS of 1.33; year-over-year, revenue grew 26.10% while adjusted EPS declined 17.90%. A notable financial highlight was EBIT of $338.71 million, which outpaced the earlier estimate and reflected strong cost execution despite commodity volatility. The main business of oil, natural gas, and NGL production contributed $811.01 million in revenue, demonstrating solid volume delivery and operational efficiency, while other business lines were de minimis.

Current Quarter Outlook (with major analytical insights)

Main upstream operations: oil, natural gas, and NGL production

The core upstream franchise will steer headline results through realized commodity prices and well performance. Forecast revenue of $773.79 million implies a sequential downtick aligned with softer oil benchmarks late in the quarter, alongside a tougher year-over-year comparison. Given last quarter’s gross margin of 76.14% and net margin of 19.92%, modeled contraction is probable as price mix skews away from peak liquids realizations and as gathering and transport costs normalize sequentially. Capital allocation discipline, including moderated completion cadence into year-end and selective deferrals, can support per-well returns but may weigh on reported volumes in the current print. Cost per BOE will be a focal point; maintaining lease operating expenses and production taxes within plan could partially offset weaker price realizations, sustaining free cash conversion in a mid-cycle strip.

Most promising profit lever: Midland Basin liquids program

The Midland Basin liquids program remains the most compelling margin contributor due to higher oil cut and established infrastructure. Even with consensus flagging a 9.70% revenue decline, this program’s economics can outperform corporate averages when oil stabilizes near recent strips and drilling and completion efficiency gains persist. Pad-scale development and zipper-frac execution have historically reduced cycle times, allowing the company to compress capital intensity and protect well-level returns. The key swing factor is oil differentials and NGL realizations; tighter Permian egress and favorable basin differentials would narrow the gap to WTI and stabilize cash margins. If service cost deflation or steady-dayrate rigs further reduce well costs, EBIT sensitivity could improve relative to consensus, creating potential for upside to the $162.26 million EBIT forecast.

Stock-price drivers this quarter: commodity tape, cost control, capital returns

Share performance into and after the print will hinge on management’s commentary about 2026 capital intensity and the cadence of completions relative to volume guidance. If the company communicates stable LOE per BOE and sustained productivity in the Midland program, investors may look through near-term EPS compression. Commodity price volatility remains the variable with immediate P&L implications; modest stabilization in oil benchmarks could cushion revenue and keep cash margins above trough assumptions. The capital returns framework will be scrutinized: with last quarter’s adjusted EPS at 1.33 and healthy EBIT delivery, investors may expect continued buybacks or variable dividends calibrated to free cash flow; any pivot toward growth-heavy capex could weigh on sentiment. Balance-sheet posture and hedge updates will influence perceived downside protection against price shocks, setting the narrative for the first half of 2026.

Analyst Opinions

Across the latest six-month cycle, institutional tone skews cautious, with a majority of views effectively bearish on the near-term earnings trajectory due to the forecasted year-over-year declines in revenue (-9.70%), EPS (-52.73%), and EBIT (-48.86%). The central argument is that softer liquids pricing and normalized differentials compress cash margins off last quarter’s high base, while completion timing tempers sequential volumes. Well-followed analysts emphasize that while the asset base remains competitive, the immediate setup reflects cyclical moderation instead of expansion, which squares with the consensus EPS estimate of 0.90. The institutional view also notes that service-cost stickiness in select categories could limit margin recapture if commodity prices do not inflect higher, making the $162.26 million EBIT bar a fair, not low, hurdle. From a positioning perspective, the cautious camp expects management to reiterate capital discipline and prioritize balance sheet strength, which supports long-term value but does not catalyze near-term earnings upside. Investors tracking the quarter should center on the margin bridge from last quarter’s 76.14% gross margin and 19.92% net margin to this quarter’s run-rate metrics implied by consensus, along with commentary on Midland program well productivity, as these datapoints will likely set the tone for revisions into mid-2026.