Devon Energy Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Devon Energy Corporation (NYSE:DVN) shareholders are probably feeling a little disappointed, since its shares fell 3.0% to US$49.17 in the week after its latest first-quarter results. Devon Energy reported US$3.8b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.53 beat expectations, being 9.6% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Devon Energy

Taking into account the latest results, the current consensus, from the 21 analysts covering Devon Energy, is for revenues of US$16.2b in 2023, which would reflect a not inconsiderable 14% reduction in Devon Energy's sales over the past 12 months. Statutory earnings per share are forecast to crater 27% to US$6.81 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$16.2b and earnings per share (EPS) of US$6.88 in 2023. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of US$65.77, suggesting that the company has met expectations in its recent result. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Devon Energy, with the most bullish analyst valuing it at US$87.00 and the most bearish at US$42.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 19% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 22% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 3.9% annually for the foreseeable future. So it's pretty clear that Devon Energy's revenues are expected to shrink faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. The consensus also reconfirmed their revenue estimates, suggesting that sales are performing in line with expectations. Plus, our data suggests that Devon Energy is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Devon Energy. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Devon Energy analysts - going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 4 warning signs for Devon Energy (2 make us uncomfortable!) that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.