Financial Comparison: SM Energy (NYSE:SM) versus Shell (NYSE:SHEL)

SM Energy (NYSE:SM) and Shell (NYSE:SHEL) are both oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, risk, earnings, dividends and valuation.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for SM Energy and Shell, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SM Energy	0	6	7	1	2.64
Shell	0	2	4	3	3.11

SM Energy currently has a consensus price target of $50.64, suggesting a potential upside of 30.24%. Shell has a consensus price target of $81.75, suggesting a potential upside of 32.17%. Given Shell’s stronger consensus rating and higher possible upside, analysts plainly believe Shell is more favorable than SM Energy.

Volatility & Risk

SM Energy has a beta of 4.14, indicating that its share price is 314% more volatile than the S&P 500. Comparatively, Shell has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.

Earnings & Valuation

This table compares SM Energy and Shell”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SM Energy	$2.44 billion	1.82	$817.88 million	$7.16	5.43
Shell	$296.76 billion	0.64	$19.36 billion	$4.86	12.73

Shell has higher revenue and earnings than SM Energy. SM Energy is trading at a lower price-to-earnings ratio than Shell, indicating that it is currently the more affordable of the two stocks.

Dividends

SM Energy pays an annual dividend of $0.80 per share and has a dividend yield of 2.1%. Shell pays an annual dividend of $2.75 per share and has a dividend yield of 4.4%. SM Energy pays out 11.2% of its earnings in the form of a dividend. Shell pays out 56.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares SM Energy and Shell’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SM Energy	33.89%	19.62%	10.87%
Shell	5.17%	14.54%	6.86%

Institutional and Insider Ownership

94.6% of SM Energy shares are held by institutional investors. Comparatively, 28.6% of Shell shares are held by institutional investors. 1.5% of SM Energy shares are held by insiders. Comparatively, 1.0% of Shell shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

SM Energy beats Shell on 10 of the 17 factors compared between the two stocks.

About SM Energy

SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids in the state of Texas. It has working interests in oil and gas producing wells in the Midland Basin and South Texas. The company was formerly known as St. Mary Land & Exploration Company and changed its name to SM Energy Company in May 2010. SM Energy Company was founded in 1908 and is headquartered in Denver, Colorado.

About Shell

Shell plc operates as an energy and petrochemical company Europe, Asia, Oceania, Africa, the United States, and Rest of the Americas. The company operates through Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions segments. It explores for and extracts crude oil, natural gas, and natural gas liquids; markets and transports oil and gas; produces gas-to-liquids fuels and other products; and operates upstream and midstream infrastructure to deliver gas to market. The company also markets and trades natural gas, liquefied natural gas (LNG), crude oil, electricity, carbon-emission rights; and markets and sells LNG as a fuel for heavy-duty vehicles. In addition, it trades in and refines crude oil and other feed stocks, such as low-carbon fuels, lubricants, bitumen, sulphur, gasoline, diesel, aviation fuel, and marine fuel; produces and sells petrochemicals for industrial use; and manages oil sands activities. Further, the company produces base chemicals comprising ethylene, propylene, and aromatics, as well as intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide, and ethylene glycol. Additionally, it generates electricity through wind and solar resources; produces and sells hydrogen; and provides electric vehicle charging services. The company was formerly known as Royal Dutch Shell plc and changed its name to Shell plc in January 2022. Shell plc was founded in 1907 and is headquartered in London, the United Kingdom.