Devon Energy Corp. (NYSE: DVN), an exploration and production (E&P) company, could interest investors who are willing to gain exposure to the U.S. oil and natural gas industry. This is because high crude oil and natural gas prices are boosting the growth of the industry and its players.
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In the past year, crude oil prices increased 52.4% and natural gas prices went up 92.5% on the back of healthy demand and restricted supply globally.
Talking about Devon, its shares surged 119.1% in the past year. Its average price forecast of $81.53 suggests 49.27% upside potential from the last closing price of $54.62. The stock’s consensus rating is a Moderate Buy, which is based on 12 Buys and seven Holds. A brief discussion on this OK-based oil digger is provided below.
Devon’s Past Performance
The company delivered better-than-expected results in all four quarters of 2021 and the first quarter of 2022.
Its earnings were $1.88 per share in the first quarter of 2022, up 7.4% from the consensus estimate of $1.75 per share and above the year-ago tally of $0.45 per share. Revenues in the quarter were $3.81 billion, in line with the consensus estimate and up nearly 85.9% from the year-ago quarter.
In the quarter, the company produced approximately 575 thousand barrels of oil equivalent (BoE) per day, up 15.2% year-over-year. Also, it rewarded shareholders with dividends of $667 million and share buybacks of $211 million in the quarter. The company’s dividend yield stands at 4.72%.
Estimates for Q2 and 2022
Devon anticipates benefiting from its portfolio mix, investments and technological capabilities, and efforts to improve operational efficiency in the second quarter and 2022. Its exposure to Anadarko, Delaware, Powder River, and Williston basins is its strength.
The company expects to produce nearly 600 thousand Boe per day in the second quarter, while average production is expected to be 570-600 thousand Boe per day in the year.
The second-quarter consensus estimate is $2.26 per share for earnings and $4.43 billion for revenues. For 2022, the consensus estimate for earnings is $8.92 per share and $17.05 billion for revenues.
Bloggers & Investors Are Positive about Devon Stock
According to TipRanks, financial bloggers are 96% Bullish on Devon, compared with the sector average of 70%. Also, investor sentiment is Very Positive on DVN as the number of portfolios holding the stock increased 4.4% in the last 30 days.
Hedge Funds & Insiders Are Negative
Meanwhile, hedge funds’ confidence signal on DVN is Negative, evident from 331.5 thousand shares sold in the last quarter. Also, insiders are Very Negative about DVN as they sold DVN stock worth $2.6 million in the last quarter.
The recent correction in the crude oil price (over fears of a recession in the country) and higher costs and expenses for Devon could be reasons behind the nervousness of hedge funds and corporate insiders.
Prospects Look Bright for Devon
Devon looks fundamentally strong to deal with hiccups like price corrections and cost inflation. It is one of the largest producers of oil and natural gas, by volume, in the United States. Further, the company could offer investors healthy returns in the form of dividends and capital gains.
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