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Devon's Shares Rise 8.1% in a Month: Is it a Good Time to Buy?
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Devon Energy Corporation’s (DVN - Free Report) shares have gained 8.1% in a month, outperforming the S&P 500 index’s return of 4% and the broader Zacks Oil and Energy sector’s decline of 5.1%.
While the one-month performance paints a positive picture for investors, looking at the last one-year performance is crucial for a fuller understanding. DVN’s stock has declined 9.2% in the past year, suggesting it is on a gradual path to recovery. Another stock from the same industry, EQT Corporation (EQT - Free Report) , registered a 14.4% decline in share price in the same time frame.
Devon Stock’s One-Month Price Performance
Image Source: Zacks Investment Research
Devon’s shares are trading above the 50-day moving average, indicating a bullish trend.
Image Source: Zacks Investment Research
Should you consider adding DVN to your portfolio only based on the recent share price recovery? Let’s probe further.
DVN Stock Rides on Strong Multi-Basin Asset Portfolio
Devon Energy’s multi-basin portfolio and focus on high-quality assets continue to boost its production. Strategic acquisitions and divestitures of non-core assets enable the company to concentrate on core assets. Devon completed the acquisition of Grayson Mill Energy last month this acquisition adds a high-margin production mix that enhances Devon’s position as one of the largest producers in the United States.
The company already raised its production volume twice in 2024. It is expected that the ongoing strong performance from existing assets and contribution from new acquisitions will allow DVN’s management to increase the production volume guidance again in 2024.
Devon Energy possesses assets that can deliver sustainable production for many years into the future and provide reliable and affordable energy to its customers. The assets currently owned by Devon can sustain the production levels for more than 10 years. The ongoing exploration activities continue to replenish production volumes and add new reserves. Devon expects its exploration expenses in the range of $15 to $25 million for 2024.
Devon also has a diverse commodity mix, with a balanced exposure to oil, natural gas and natural gas liquids production volumes. The company continues to evaluate opportunities to add more high-quality resources to its portfolio.
Devon’s low-cost operation boosts its margins. Devon is also working to reduce its drilling and completion costs and is aligning personnel with the go-forward business.
Devon Raises Shareholders' Value
Devon Energy has designed a strategy to deliver higher cash returns to its shareholders compared with the broader market. Devon Energy returned $532 million to its shareholders in the first half of 2024 through share buybacks, fixed dividends and variable dividends. The company benefits when energy prices are high and accordingly pays a higher variable dividend to its shareholders. The current dividend yield is 2.05% better than the Zacks S&P Composite’s yield of 1.5%. Check DVN’s dividend history here.
Image Source: Zacks Investment Research
The company repurchased shares worth $2.7 billion as of June 30, 2024, and management has increased its share-repurchase authorization by 67% to $5 billion through mid-year 2026.
Devon Stock Returns Better Than Industry
Devon Energy’s return on invested capital (ROIC) has outperformed the industry average in the trailing 12 months. ROIC of DVN was 10.29% compared with the industry average of 7.71%. The company has been investing effectively in profitable projects, which is evident from its ROIC.
Image Source: Zacks Investment Research
Devon’s Shares Are Trading At a Discount
Devon Energy shares are somewhat inexpensive on a relative basis, with its current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) being 4.27 compared with its industry average of 6.
Image Source: Zacks Investment Research
To Sum Up
Devon Energy has a balanced exposure to oil, natural gas and NGL production, and its low-cost production structure boosts margins. The contribution from its multi-basin assets generates free cash flow and assists the company in strengthening its balance sheet and increasing the value of its shareholders.
Devon Energy is a high-quality stock with strong ROIC, and is trading at a discount. Investors might weigh their options to add this stock with a VGM Score of B, which indicates a strong performance.
Those who already own this Zacks Rank #3 (Hold) stock would do well to retain it in their portfolio.
Image: Bigstock
Devon's Shares Rise 8.1% in a Month: Is it a Good Time to Buy?
Devon Energy Corporation’s (DVN - Free Report) shares have gained 8.1% in a month, outperforming the S&P 500 index’s return of 4% and the broader Zacks Oil and Energy sector’s decline of 5.1%.
While the one-month performance paints a positive picture for investors, looking at the last one-year performance is crucial for a fuller understanding. DVN’s stock has declined 9.2% in the past year, suggesting it is on a gradual path to recovery. Another stock from the same industry, EQT Corporation (EQT - Free Report) , registered a 14.4% decline in share price in the same time frame.
Devon Stock’s One-Month Price Performance
Image Source: Zacks Investment Research
Devon’s shares are trading above the 50-day moving average, indicating a bullish trend.
Image Source: Zacks Investment Research
Should you consider adding DVN to your portfolio only based on the recent share price recovery? Let’s probe further.
DVN Stock Rides on Strong Multi-Basin Asset Portfolio
Devon Energy’s multi-basin portfolio and focus on high-quality assets continue to boost its production. Strategic acquisitions and divestitures of non-core assets enable the company to concentrate on core assets. Devon completed the acquisition of Grayson Mill Energy last month this acquisition adds a high-margin production mix that enhances Devon’s position as one of the largest producers in the United States.
The company already raised its production volume twice in 2024. It is expected that the ongoing strong performance from existing assets and contribution from new acquisitions will allow DVN’s management to increase the production volume guidance again in 2024.
Devon Energy possesses assets that can deliver sustainable production for many years into the future and provide reliable and affordable energy to its customers. The assets currently owned by Devon can sustain the production levels for more than 10 years. The ongoing exploration activities continue to replenish production volumes and add new reserves. Devon expects its exploration expenses in the range of $15 to $25 million for 2024.
Devon also has a diverse commodity mix, with a balanced exposure to oil, natural gas and natural gas liquids production volumes. The company continues to evaluate opportunities to add more high-quality resources to its portfolio.
Devon’s low-cost operation boosts its margins. Devon is also working to reduce its drilling and completion costs and is aligning personnel with the go-forward business.
Devon Raises Shareholders' Value
Devon Energy has designed a strategy to deliver higher cash returns to its shareholders compared with the broader market. Devon Energy returned $532 million to its shareholders in the first half of 2024 through share buybacks, fixed dividends and variable dividends. The company benefits when energy prices are high and accordingly pays a higher variable dividend to its shareholders. The current dividend yield is 2.05% better than the Zacks S&P Composite’s yield of 1.5%. Check DVN’s dividend history here.
Image Source: Zacks Investment Research
The company repurchased shares worth $2.7 billion as of June 30, 2024, and management has increased its share-repurchase authorization by 67% to $5 billion through mid-year 2026.
Devon Stock Returns Better Than Industry
Devon Energy’s return on invested capital (ROIC) has outperformed the industry average in the trailing 12 months. ROIC of DVN was 10.29% compared with the industry average of 7.71%. The company has been investing effectively in profitable projects, which is evident from its ROIC.
Image Source: Zacks Investment Research
Devon’s Shares Are Trading At a Discount
Devon Energy shares are somewhat inexpensive on a relative basis, with its current trailing 12-month Enterprise Value/Earnings before Interest Tax Depreciation and Amortization (EV/EBITDA TTM) being 4.27 compared with its industry average of 6.
Image Source: Zacks Investment Research
To Sum Up
Devon Energy has a balanced exposure to oil, natural gas and NGL production, and its low-cost production structure boosts margins. The contribution from its multi-basin assets generates free cash flow and assists the company in strengthening its balance sheet and increasing the value of its shareholders.
Devon Energy is a high-quality stock with strong ROIC, and is trading at a discount. Investors might weigh their options to add this stock with a VGM Score of B, which indicates a strong performance.
Those who already own this Zacks Rank #3 (Hold) stock would do well to retain it in their portfolio.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.