Why SM Energy Stock Rocketed 17% Higher on Monday

Shares of U.S. onshore oil and natural gas driller SM Energy Company (NYSE: SM) jumped as much as 17% on June 1, rising throughout the morning and into the early part of the afternoon. By 2 p.m. EDT, that stock was sitting just off the day's highs. The energy company's balance sheet was the big story of the day.

At the end of the first quarter, SM Energy's debt-to-equity ratio was nearly 1.15 times, which isn't terrible for a company that operates in a stable industry. However, SM Energy drills for oil and natural gas, which is a highly cyclical business. The worldwide effort to slow the spread of COVID-19 has pushed energy prices down to historic lows as economies around the world basically shut down. SM Energy and many of its peers are struggling. SM Energy, specifically, lost $3.64 per share in the first quarter. In the midst of a deep industry downturn, investors have been quite reasonably worried that the company won't be able to carry the weight of its debt.

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Source Fool.com