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Devon Energy Corporation (DVN) Hits Fresh High: Is There Still Room to Run?
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Have you been paying attention to shares of Devon Energy (DVN - Free Report) ? Shares have been on the move with the stock up 23.2% over the past month. The stock hit a new 52-week high of $75.44 in the previous session. Devon Energy has gained 67.6% since the start of the year compared to the 37.9% move for the Zacks Oils-Energy sector and the 58.3% return for the Zacks Oil and Gas - Exploration and Production - United States industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 2, 2022, Devon Energy reported EPS of $1.88 versus consensus estimate of $1.74 while it missed the consensus revenue estimate by 5.12%.
For the current fiscal year, Devon Energy is expected to post earnings of $8.77 per share on $17.88 billion in revenues. This represents a 148.44% change in EPS on a 50.01% change in revenues. For the next fiscal year, the company is expected to earn $9.26 per share on $17.8 billion in revenues. This represents a year-over-year change of 5.69% and -0.44%, respectively.
Valuation Metrics
Devon Energy may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Devon Energy has a Value Score of C. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 8.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 5.8X. On a trailing cash flow basis, the stock currently trades at 11.1X versus its peer group's average of 6.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Devon Energy currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Devon Energy passes the test. Thus, it seems as though Devon Energy shares could have a bit more room to run in the near term.
How Does DVN Stack Up to the Competition?
Shares of DVN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Chesapeake Energy Corporation (CHK - Free Report) . CHK has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Chesapeake Energy Corporation beat our consensus estimate by 25.61%, and for the current fiscal year, CHK is expected to post earnings of $13.71 per share on revenue of $6.2 billion.
Shares of Chesapeake Energy Corporation have gained 18.6% over the past month, and currently trade at a forward P/E of 7.31X and a P/CF of 1.6X.
The Oil and Gas - Exploration and Production - United States industry is in the top 2% of all the industries we have in our universe, so it looks like there are some nice tailwinds for DVN and CHK, even beyond their own solid fundamental situation.
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Devon Energy Corporation (DVN) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of Devon Energy (DVN - Free Report) ? Shares have been on the move with the stock up 23.2% over the past month. The stock hit a new 52-week high of $75.44 in the previous session. Devon Energy has gained 67.6% since the start of the year compared to the 37.9% move for the Zacks Oils-Energy sector and the 58.3% return for the Zacks Oil and Gas - Exploration and Production - United States industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 2, 2022, Devon Energy reported EPS of $1.88 versus consensus estimate of $1.74 while it missed the consensus revenue estimate by 5.12%.
For the current fiscal year, Devon Energy is expected to post earnings of $8.77 per share on $17.88 billion in revenues. This represents a 148.44% change in EPS on a 50.01% change in revenues. For the next fiscal year, the company is expected to earn $9.26 per share on $17.8 billion in revenues. This represents a year-over-year change of 5.69% and -0.44%, respectively.
Valuation Metrics
Devon Energy may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Devon Energy has a Value Score of C. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 8.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 5.8X. On a trailing cash flow basis, the stock currently trades at 11.1X versus its peer group's average of 6.4X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Devon Energy currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Devon Energy passes the test. Thus, it seems as though Devon Energy shares could have a bit more room to run in the near term.
How Does DVN Stack Up to the Competition?
Shares of DVN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Chesapeake Energy Corporation (CHK - Free Report) . CHK has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Chesapeake Energy Corporation beat our consensus estimate by 25.61%, and for the current fiscal year, CHK is expected to post earnings of $13.71 per share on revenue of $6.2 billion.
Shares of Chesapeake Energy Corporation have gained 18.6% over the past month, and currently trade at a forward P/E of 7.31X and a P/CF of 1.6X.
The Oil and Gas - Exploration and Production - United States industry is in the top 2% of all the industries we have in our universe, so it looks like there are some nice tailwinds for DVN and CHK, even beyond their own solid fundamental situation.