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Devon Outperforms Industry in the Past Year: Buy or Hold the Stock?
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Key Takeaways
DVN's shares gained 30.9% in a year, outpacing its industry, sector and the S&P 500.
Devon Energy benefits from multi-basin assets, cost controls and a diversified commodity mix.
DVN trades below the industry EV/EBITDA average, though its ROE trails the industry average.
Devon Energy Corporation’s (DVN - Free Report) shares have gained 30.9% in the past year, outperforming the Zacks Oil & Gas- Exploration and Production- United States industry’s return of 3.6% and the broader Zacks Oil and Energy sector’s 29%. The company has also outperformed the S&P 500’s 26.1% return in the same time period.
Devon Energy is supported by its high-quality multi-basin asset portfolio, disciplined cost-control measures, prudent debt management and strategic investments aimed at enhancing and expanding the existing operations. However, the company continues to face headwinds from intense competition within the oil and gas industry and ongoing volatility in commodity prices.
Another stock operating in the same industry, EQT Corporation (EQT - Free Report) , registered a 0.8% gain in the last month and its shares have gradually dropped from the 60.2% return in the past year. EQT is a leading producer of natural gas in the highly productive Appalachian basin. The company is strategically positioned to benefit from the growing demand for clean energy.
Price Performance (One Year)
Image Source: Zacks Investment Research
Should investors consider adding Devon Energy to their portfolios solely based on its recent share price strength? A closer look is warranted, as several key factors can help determine whether DVN represents an attractive entry point at current levels.
Core Strengths Supporting Devon Energy’s Long-Term Outlook
Devon Energy maintains a strong operating footprint across several premier U.S. oil-producing regions, including the Delaware Basin, Eagle Ford, Anadarko Basin, Rockies and Powder River Basin. The company has continued to achieve higher production rates from newly drilled wells across these core plays. Additionally, improved drilling efficiencies, shorter cycle times, production optimization initiatives and ongoing cost-control efforts are helping lower breakeven costs and enhance profitability across its asset portfolio.
Devon Energy has strategically expanded its operations through acquisitions, with its all-stock merger with Coterra Energy significantly enhancing scale and asset quality. The combined company now holds a leading position in the Delaware Basin, enabling greater operational efficiencies, longer lateral drilling and lower development costs. The merger is also expected to generate approximately $1 billion in annual pre-tax synergies by 2027 through cost savings and efficiency improvements.
Devon Energy continues to enhance profitability through its disciplined low-cost operating approach. By divesting higher-cost assets and prioritizing efficient, low-cost production opportunities, the company has steadily improved its overall cost structure. Continued reductions in drilling and completion costs, coupled with workforce optimization initiatives aligned with strategic objectives, are further supporting healthy operating margins.
The company also benefits from a diversified commodity portfolio spanning oil, natural gas and natural gas liquids, which helps mitigate commodity-specific risks. In addition, Devon Energy remains focused on strengthening the asset base through the acquisition and development of high-quality resource properties, positioning it for sustainable long-term growth.
Devon Energy’s Estimates Moving North
The Zacks Consensus Estimate for 2026 and 2027 earnings per share is showing year-over-year increases of 20.66% and 4.68%, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 and 2027 sales is showing year-over-year increases of 41.88% and 14.54%, respectively.
Image Source: Zacks Investment Research
Another company, Occidental Petroleum Corporation (OXY - Free Report) , also has substantial exposure in domestic basins and international operations. The Zacks Consensus Estimate for Occidental’s 2026 earnings per share has moved up 161.99% year over year, while sales increased 3.56%.
DVN Stock Returns Lower Than Industry
The return on equity (“ROE”) measures how well a company generates returns from the shareholders’ equity. ROE indicates how well management utilizes investors' funds to expand the business.
Devon Energy’s ROE has underperformed the industry average in the trailing 12 months. ROE of DVN was 15.22% compared with the industry average of 16.04%.
Image Source: Zacks Investment Research
DVN Stock's Valuation
Devon Energy is currently trading at a discount relative to its industry based on the trailing 12-month Enterprise Value to EBITDA (EV/EBITDA TTM) basis. DVN’s current valuation of 5.45X is lower than the industry average of 11.81X and it is trading above the five-year median of 4.27X.
Image Source: Zacks Investment Research
Wrapping Up
Devon Energy benefits from a well-balanced production mix of oil, natural gas and natural gas liquids, while its low-cost operating structure supports strong profit margins. Its diversified multi-basin asset portfolio generates substantial free cash flow, enabling the company to strengthen its balance sheet and enhance shareholder value. Additionally, contributions from acquired assets are expected to further increase production volumes and support growth.
View the Zacks #1 Rank List
Image: Bigstock
Devon Outperforms Industry in the Past Year: Buy or Hold the Stock?
Key Takeaways
Devon Energy Corporation’s (DVN - Free Report) shares have gained 30.9% in the past year, outperforming the Zacks Oil & Gas- Exploration and Production- United States industry’s return of 3.6% and the broader Zacks Oil and Energy sector’s 29%. The company has also outperformed the S&P 500’s 26.1% return in the same time period.
Devon Energy is supported by its high-quality multi-basin asset portfolio, disciplined cost-control measures, prudent debt management and strategic investments aimed at enhancing and expanding the existing operations. However, the company continues to face headwinds from intense competition within the oil and gas industry and ongoing volatility in commodity prices.
Another stock operating in the same industry, EQT Corporation (EQT - Free Report) , registered a 0.8% gain in the last month and its shares have gradually dropped from the 60.2% return in the past year. EQT is a leading producer of natural gas in the highly productive Appalachian basin. The company is strategically positioned to benefit from the growing demand for clean energy.
Price Performance (One Year)
Image Source: Zacks Investment Research
Should investors consider adding Devon Energy to their portfolios solely based on its recent share price strength? A closer look is warranted, as several key factors can help determine whether DVN represents an attractive entry point at current levels.
Core Strengths Supporting Devon Energy’s Long-Term Outlook
Devon Energy maintains a strong operating footprint across several premier U.S. oil-producing regions, including the Delaware Basin, Eagle Ford, Anadarko Basin, Rockies and Powder River Basin. The company has continued to achieve higher production rates from newly drilled wells across these core plays. Additionally, improved drilling efficiencies, shorter cycle times, production optimization initiatives and ongoing cost-control efforts are helping lower breakeven costs and enhance profitability across its asset portfolio.
Devon Energy has strategically expanded its operations through acquisitions, with its all-stock merger with Coterra Energy significantly enhancing scale and asset quality. The combined company now holds a leading position in the Delaware Basin, enabling greater operational efficiencies, longer lateral drilling and lower development costs. The merger is also expected to generate approximately $1 billion in annual pre-tax synergies by 2027 through cost savings and efficiency improvements.
Devon Energy continues to enhance profitability through its disciplined low-cost operating approach. By divesting higher-cost assets and prioritizing efficient, low-cost production opportunities, the company has steadily improved its overall cost structure. Continued reductions in drilling and completion costs, coupled with workforce optimization initiatives aligned with strategic objectives, are further supporting healthy operating margins.
The company also benefits from a diversified commodity portfolio spanning oil, natural gas and natural gas liquids, which helps mitigate commodity-specific risks. In addition, Devon Energy remains focused on strengthening the asset base through the acquisition and development of high-quality resource properties, positioning it for sustainable long-term growth.
Devon Energy’s Estimates Moving North
The Zacks Consensus Estimate for 2026 and 2027 earnings per share is showing year-over-year increases of 20.66% and 4.68%, respectively.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2026 and 2027 sales is showing year-over-year increases of 41.88% and 14.54%, respectively.
Image Source: Zacks Investment Research
Another company, Occidental Petroleum Corporation (OXY - Free Report) , also has substantial exposure in domestic basins and international operations. The Zacks Consensus Estimate for Occidental’s 2026 earnings per share has moved up 161.99% year over year, while sales increased 3.56%.
DVN Stock Returns Lower Than Industry
The return on equity (“ROE”) measures how well a company generates returns from the shareholders’ equity. ROE indicates how well management utilizes investors' funds to expand the business.
Devon Energy’s ROE has underperformed the industry average in the trailing 12 months. ROE of DVN was 15.22% compared with the industry average of 16.04%.
Image Source: Zacks Investment Research
DVN Stock's Valuation
Devon Energy is currently trading at a discount relative to its industry based on the trailing 12-month Enterprise Value to EBITDA (EV/EBITDA TTM) basis. DVN’s current valuation of 5.45X is lower than the industry average of 11.81X and it is trading above the five-year median of 4.27X.
Image Source: Zacks Investment Research
Wrapping Up
Devon Energy benefits from a well-balanced production mix of oil, natural gas and natural gas liquids, while its low-cost operating structure supports strong profit margins. Its diversified multi-basin asset portfolio generates substantial free cash flow, enabling the company to strengthen its balance sheet and enhance shareholder value. Additionally, contributions from acquired assets are expected to further increase production volumes and support growth.
Despite DVN’s lower ROE than the industry, investors can hold on to this Zacks Rank #3 (Hold) stock, given its strong share price movement and positive earnings estimates. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.