ELAN: Not rated
Published 15 Sep 2026, 21:02 BST. This is the frozen version, not the current recommendation.
Why this assessment was issued
First recorded assessment. Current data checks do not support an active rating.
A target is not published until the required checks pass. The model estimate is outside SM's automatic publication range of one quarter to four times the current price. The business assumptions and an independent valuation need review before a whole-company target or rating can be published. The model value is not moved towards the share price.
Supporting evidence
Year-to-date profit has improved
Across 2 completed quarters since 2025-12-31, net income was 111.0m versus 78.0m in the matching prior-year periods (USD). Check whether the latest quarter changes that direction.
The stock is leading its sector
Over one year, the stock changed +25.0% against +19.7% for Healthcare (XLV). The gap is +5.3 percentage points. These are price returns, before dividends.
Opposing evidence
Interest cover is thin
Debt less cash was 3,388.0m at 2026-06-30. Operating profit covered interest 1.8 times.
The starting valuation is below the price
The central assumptions give $1.56 per share, -93.2% against the weekly close. This is a scenario to test, not an analyst price target.
Original assumptions and checks
| tax | 25 |
|---|---|
| price | 23.17 |
| years | 1.2101300479123889 |
| claims | 0.0 |
| growth | 11.272606129830574 |
| margin | 9.203187250996017 |
| profit | -199000000.0 |
| shares | 499449583.0 |
| cash_ok | True |
| debt_ok | False |
| growths | [10.38834951456311, 12.15686274509804, 14.920368818105612, 10.233682514101528] |
| revenue | 5020000000.0 |
| discount | 9.120849593342683 |
| downside | 100.0 |
| interest | 259000000.0 |
| leverage | 3.4243488569295284 |
| net_debt | 3388000000.0 |
| terminal | 2 |
| free_cash | 379000000.0 |
| ppe_ratio | 0.2810756972111554 |
| buy_hurdle | 19.069273604971553 |
| extra_debt | 167913572.4054144 |
| volatility | 38.138547209943106 |
| basis_notes | [] |
| capex_ratio | 0.047410358565737054 |
| share_ratio | Not available |
| annual_years | 5 |
| capital_cost | {'tax': 25.0, 'beta': 1.1710894995302998, 'debt': 3918000000.0, 'beta_end': '2026-09-11', 'discount': 9.120849593342683, 'debt_cost': 6.610515569167943, 'risk_free': 4.96, 'beta_start': '2023-09-22', 'beta_weeks': 156, 'source_url': 'https://home.treasury.gov/resource-center/data-chart-center/interest-rates', 'debt_weight': 25.29333483802666, 'equity_cost': 10.530298331767666, 'equity_value': 11572246838.11, 'adjusted_beta': 1.1140596663535332, 'credit_spread': 1.5, 'equity_premium': 5.0, 'risk_free_date': '2026-09-11', 'observed_interest': 6.610515569167943} |
| depreciation | 13.804780876494025 |
| normal_capex | 13.804780876494025 |
| tax_measured | False |
| current_capex | 4.741035856573705 |
| working_ratio | 0.2964143426294821 |
| financial_date | 2026-06-30 |
| interest_cover | 1.333669343208854 |
| operating_cash | 617000000.0 |
| terminal_share | 85.37475115786486 |
| reporting_basis | quarterly |
| uncapped_growth | 11.272606129830574 |
| projected_margin | 6.880883663169188 |
| historical_margin | 6.880883663169188 |
| depreciation_ratio | 0.13804780876494024 |
| net_debt_at_target | 3555913572.4054146 |
| non_operating_assets | 0 |
Recent price · Passed. Weekly close dated 2026-09-11.
Current financials · Passed. Statements through 2026-06-30; factor prices dated 2026-09-11.
Price risk · Passed. Risk uses the latest 52 weekly price changes.
Operating history · Passed. 5 annual results, retaining operating losses and unusually strong years.
Quarterly operating results · Passed. Four quarters through 2026-06-30.
Cash-flow and ownership inputs · Passed. Capital spending, depreciation estimate, operating capital, debt, cash and other ownership claims are recorded.
Depreciation basis · Passed. Four matching quarters of operating income and reported depreciation are required. An unrelated EBITDA-minus-EBIT difference is not treated as depreciation.
Matching currency · Passed. USD statements and share price.
Operating totals · Passed. Quarterly sales and operating profit agree with the trailing snapshot within 5%.
Operating discount rate · Passed. The operating cash-flow discount rate needs a current USD Treasury rate, at least two years of matching market returns, and dated debt and share inputs. An equity return hurdle is not used as the company's funding cost.
Continuing growth and funding cost · Passed. The funding cost must exceed continuing growth in every valuation scenario.
Scenario consistency · Passed. The weaker, central and stronger assumptions must give an ordered range. When growth costs more capital than it earns, a tailored operating review is required before publishing a target.
Target publication review · Review needed. The model estimate is outside SM's automatic publication range of one quarter to four times the current price. The business assumptions and an independent valuation need review before a whole-company target or rating can be published. The model value is not moved towards the share price.
Cash-flow value dependence · Passed. Cash flows beyond year five account for 85.4% of the absolute present value. This is within SM's 90% automatic publication limit.
Policy sm-review-2-research · Model sm-assessment-12-rating-balance · Data 2bdd313bf8fa.