Devon Energy Corporation (DVN - Free Report) is slated to report second-quarter 2017 results after the market closes on Aug 1. In the first quarter, the company reported a positive earnings surprise of 2.50%. Let’s see how things are shaping up for this earnings season.
Factors to Consider
Devon Energy’s investments in resource-rich assets and addition of more rigs is expected to improve 2017 daily oil production by 13-17% from fourth-quarter 2016 levels.
Oil prices in the second quarter have dropped from the highs it achieved during the first quarter of 2017. Even with higher production, Devon Energy’s earnings in the second quarter are expected to be adversely impacted from the drop in crude oil prices.
Our proven model does not conclusively show that Devon Energy is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here as you will see below.
Zacks ESP: The company’s Earnings ESP is +6.06%. This is because the Most Accurate estimate is pegged at 35 cents and the Zacks Consensus Estimate is pegged at 33 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Devon Energy’s Zacks Rank #4 (Sell), when combined with its Earnings ESP of +6.06%, makes a beat unlikely this quarter. Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies from the industry that you may want to consider instead, as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Rice Energy Inc. (RICE - Free Report) has an Earnings ESP of +9.09% and carries a Zacks Rank #3. It is slated to report second-quarter 2017 results on Aug 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
WPX Energy (WPX - Free Report) has an Earnings ESP of +6.25% and carries a Zacks Rank #3. It is slated to report second-quarter 2017 results on Aug 2.
Goodrich Petroleum Corporation (GDP - Free Report) has an Earnings ESP of +3.23% and carries a Zacks Rank #3. It is slated to report second-quarter 2017 results on Aug 4.
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