Devon Energy (NYSE:DVN) - Share price, News & Analysis

Q: What is the Fair Price of DVN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

DVN ($53.77) is trading below our estimate of [[fair value]] ($53.87)

DVN fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	1/6
Past Performance	4/6
Financial Health	4/6
Dividends	5/6

DVN Stock Overview

Devon Energy Corporation, an independent energy company, primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States.

Rewards

Trading at 0.2% below our estimate of its fair value

Became profitable this year

Risk Analysis

Earnings are forecast to decline by an average of 12.1% per year for the next 3 years

Has a high level of debt

Unstable dividend track record

Significant insider selling over the past 3 months

Devon Energy Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Devon Energy
Historical stock prices
Current Share Price	US$53.77
52 Week High	US$79.40
52 Week Low	US$24.05
Beta	2.59
1 Month Change	-29.06%
3 Month Change	-11.05%
1 Year Change	80.68%
3 Year Change	88.53%
5 Year Change	68.19%
Change since IPO	711.62%

Recent News & Updates

Jun 14

Devon's Latest Acquisition, Dividend Policy And Management Make It A Buy

We really like the RimRock acquisition that Devon Energy announced because it is immediately accretive and allows management to increase the dividend. Devon believes that production from the purchased acreage can increase roughly 33% over the next year with $100 million in CapEx in 2022. Management continues to pay down debt and keep hedges at around 20% of production for 2022.

Shareholder Returns

	DVN	US Oil and Gas	US Market
7D	-7.3%	-1.4%	6.6%
1Y	80.7%	26.3%	-18.4%

Return vs Industry: DVN exceeded the US Oil and Gas industry which returned 26.3% over the past year.

Return vs Market: DVN exceeded the US Market which returned -18.4% over the past year.

Price Volatility

Is DVN's price volatile compared to industry and market?
DVN volatility
DVN Average Weekly Movement	8.4%
Oil and Gas Industry Average Movement	8.6%
Market Average Movement	8.1%
10% most volatile stocks in US Market	16.6%
10% least volatile stocks in US Market	3.2%

Stable Share Price: DVN is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: DVN's weekly volatility (8%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1971	1,600	Rick Muncrief	https://www.devonenergy.com

Devon Energy Corporation, an independent energy company, primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. It operates approximately 5,134 gross wells. Devon Energy Corporation was incorporated in 1971 and is headquartered in Oklahoma City, Oklahoma.

Devon Energy Fundamentals Summary

How do Devon Energy's earnings and revenue compare to its market cap?
DVN fundamental statistics
Market Cap	US$35.51b
Earnings (TTM)	US$3.55b
Revenue (TTM)	US$14.94b

10.0x

P/E Ratio

2.4x

P/S Ratio

Is DVN overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
DVN income statement (TTM)
Revenue	US$14.94b
Cost of Revenue	US$6.24b
Gross Profit	US$8.70b
Other Expenses	US$5.15b
Earnings	US$3.55b

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Aug 01, 2022

Earnings per share (EPS)	5.37
Gross Margin	58.21%
Net Profit Margin	23.73%
Debt/Equity Ratio	68.6%

How did DVN perform over the long term?

See historical performance and comparison

Dividends

9.4%

Current Dividend Yield

50%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is DVN undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for DVN?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for DVN. This is calculated by dividing DVN's market cap by their current preferred multiple.
What is DVN's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$35.51b

DVN key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.7x
Enterprise Value/EBITDA	6x
PEG Ratio	-0.8x

Price to Earnings Ratio vs Peers

How does DVN's PE Ratio compare to its peers?

DVN PE Ratio vs Peers

The above table shows the PE ratio for DVN vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	20.3x

Forward PE

Price-To-Earnings vs Peers: DVN is good value based on its Price-To-Earnings Ratio (10x) compared to the peer average (20.3x).

Price to Earnings Ratio vs Industry

How does DVN's PE Ratio compare vs other companies in the US Oil and Gas Industry?

Price-To-Earnings vs Industry: DVN is good value based on its Price-To-Earnings Ratio (10x) compared to the US Oil and Gas industry average (11.6x)

Price to Earnings Ratio vs Fair Ratio

What is DVN's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

DVN PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	10x
Fair PE Ratio	14.4x

Price-To-Earnings vs Fair Ratio: DVN is good value based on its Price-To-Earnings Ratio (10x) compared to the estimated Fair Price-To-Earnings Ratio (14.4x).

Share Price vs Fair Value

What is the Fair Price of DVN when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: DVN ($53.77) is trading below our estimate of fair value ($53.87)

Significantly Below Fair Value: DVN is trading below fair value, but not by a significant amount.

Price to Earnings Growth Ratio

PEG Ratio: DVN's earnings are forecast to decline next year, so we can't calculate its PEG ratio.

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Future Growth

How is Devon Energy forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-12.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: DVN's earnings are forecast to decline over the next 3 years (-12.1% per year).

Earnings vs Market: DVN's earnings are forecast to decline over the next 3 years (-12.1% per year).

High Growth Earnings: DVN's earnings are forecast to decline over the next 3 years.

Revenue vs Market: DVN's revenue is expected to decline over the next 3 years (-12.8% per year).

High Growth Revenue: DVN's revenue is forecast to decline over the next 3 years (-12.8% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: DVN's Return on Equity is forecast to be high in 3 years time (20.6%)

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Past Performance

How has Devon Energy performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-15.4%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: DVN has high quality earnings.

Growing Profit Margin: DVN became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: DVN has become profitable over the past 5 years, growing earnings by -15.4% per year.

Accelerating Growth: DVN has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: DVN has become profitable in the last year, making it difficult to compare its past year earnings growth to the Oil and Gas industry (98.5%).

Return on Equity

High ROE: DVN's Return on Equity (38.3%) is considered high.

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Financial Health

How is Devon Energy's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: DVN's short term assets ($5.0B) exceed its short term liabilities ($3.8B).

Long Term Liabilities: DVN's short term assets ($5.0B) do not cover its long term liabilities ($8.6B).

Debt to Equity History and Analysis

Debt Level: DVN's net debt to equity ratio (42.5%) is considered high.

Reducing Debt: DVN's debt to equity ratio has reduced from 95.4% to 68.6% over the past 5 years.

Debt Coverage: DVN's debt is well covered by operating cash flow (94.9%).

Interest Coverage: DVN's interest payments on its debt are well covered by EBIT (11.9x coverage).

Balance Sheet

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Dividend

What is Devon Energy current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

9.45%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: DVN's dividend (9.45%) is higher than the bottom 25% of dividend payers in the US market (1.57%).

High Dividend: DVN's dividend (9.45%) is in the top 25% of dividend payers in the US market (4.24%)

Stability and Growth of Payments

Stable Dividend: DVN's dividend payments have been volatile in the past 10 years.

Growing Dividend: DVN's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (50.1%), DVN's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (81.9%), DVN's dividend payments are covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

3.4yrs

Average management tenure

CEO

Rick Muncrief (62 yo)

1.42yrs

Tenure

US$11,914,547

Compensation

Mr. Richard E. Muncrief, also known as Rick, serves as Independent Director at The Williams Companies, Inc. since March 01, 2022. He serves as President, Chief Executive Officer & Director at Devon Energy...

CEO Compensation Analysis

Compensation vs Market: Rick's total compensation ($USD11.91M) is about average for companies of similar size in the US market ($USD13.44M).

Compensation vs Earnings: Insufficient data to compare Rick's compensation with company performance.

Leadership Team

Experienced Management: DVN's management team is considered experienced (3.4 years average tenure).

Board Members

Experienced Board: DVN's board of directors are considered experienced (5 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: DVN insiders have only sold shares in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/26 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31