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Devon (DVN) to Report Q2 Earnings: What's in the Offing?

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Devon Energy Corporation (DVN - Free Report) is set to report second-quarter earnings on Aug 4, after market close. This oil and gas company delivered an earnings surprise of 60.6% in the last four quarters.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly results.

Factors at Play

Drop in oil prices and reduction in global demand for oil due to the novel coronavirus outbreak are likely to have an adverse impact on second-quarter results. However, Devon hedged a substantial portion of oil and gas production to safeguard against fluctuating prices. It took initiatives to decrease operating costs and increase efficiency across its portfolio.

These initiatives, which allowed Devon to maintain financial strength and liquidity amid the COVID-19-led crisis, are likely to reflect on second-quarter results.

Expectation

Devon expects second-quarter oil production in the range of 145,000-155,000 barrels of oil per day (Boe/d), taking into consideration 10,000 boe/d decline in output, due to restricted flowback on select wells and the deferral of a few well completions. The Zacks Consensus Estimate for second-quarter oil production is pegged at 152,000 Boe/d.

The Zacks Consensus Estimate for the bottom line for the second quarter is pegged at a loss of 25 cents per share, indicating a 158.1% decline from the prior-year reported figure.

What Our Quantitative Model Predicts

Our proven model does not conclusively predict an earnings beat for Devon this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Devon Energy Corporation Price and EPS Surprise

Devon Energy Corporation Price and EPS Surprise

Devon Energy Corporation price-eps-surprise | Devon Energy Corporation Quote

Earnings ESP: The company has an Earnings ESP of -3.18%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Devon currently carries a Zacks Rank of 3.

Stocks to Consider

Investors can consider the following players from the same industry that have the right combination of elements to post an earnings beat in the to-be-reported quarter.

Diamondback Energy Inc. (FANG - Free Report) is scheduled to release second-quarter 2020 numbers on Aug 3. It has an Earnings ESP of +6.69% and carries a Zacks Rank #3.

Noble Energy Inc. (NBL - Free Report) is slated to release second-quarter 2020 numbers on Aug 3. It has an Earnings ESP of +9.62% and carries a Zacks Rank 1.

Parsley Energy, Inc. (PE - Free Report) is set to release second-quarter earnings on Aug 5. It has an Earnings ESP of +0.11% and carries a Zacks Rank #3.

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