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What's in the Cards for Devon Energy (DVN) in Q1 Earnings?

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Devon Energy Corporation (DVN - Free Report) is slated to report first-quarter 2018 results after the closing bell on May 1. In the fourth quarter, the company reported a negative earnings surprise of 36.67%. Let’s see how things are shaping up for this earnings season.

Factors to Consider

Devon Energy’s strong production can be attributed to contribution from its domestic-resource plays and its shifting focus toward high margin production regions. However, due to severe winter weather in January this year, the first quarter production is expected to be down by 10,000 barrels per day.

The company estimates total production from its assets in the first quarter of 2018 in the range of 530,000-554,000 barrels of oil equivalent (Boe) per day compared with 548,000 Boe achieved in fourth-quarter 2017. Oil production from U.S. operation excluding the Eagle Ford is expected to improve 15% sequentially.

The expected decline in the commodity prices is expected to hurt Devon Energy. Total realized price, including cash settlements at the end of the fourth quarter, was $27.78 per Boe. The Zacks Consensus Estimate projects total realized price for the first quarter to be $26.87 Boe, reflecting a sequential decline of 3.3%.

The Zacks Consensus Estimate for total revenues is $3,852 million for the first quarter, exhibiting a sequential decline of 3.33%. Earnings estimate of 22 cents reflected a sequential decline of 42.1%.

Under Vision 2020 initiative, Devon Energy continues to take steps to divest non-core assets, lower debt levels and increase value of its shareholders.

Earnings Whispers

Our proven model does not conclusively show that Devon Energy is likely to beat on 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.

Devon Energy Corporation Price and EPS Surprise


Devon Energy Corporation Price and EPS Surprise | Devon Energy Corporation Quote


Zacks ESP: The company’s Earnings ESP is -12.18%. This is because the Most Accurate estimate of 19 cents is pegged lower than the Zacks Consensus Estimate of 22 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 #5 (Strong Sell), when combined with Earnings ESP of -12.18%, makes a beat unlikely this quarter.

We caution investors against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions. Devon Energy’s first-quarter earnings estimate of 22 cents dropped 8.3% in last seven days.

Stocks with Favorable Combination

Here are some companies from the same industry you may want to consider that have the right combination of elements to post an earnings beat:

EOG Resources, Inc. EOG has an Earnings ESP of +12.5% and sports a Zacks Rank #1. The company is likely to report first-quarter earnings numbers around May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Comstock Resources, Inc. CRK has an Earnings ESP of +37.34% and a Zacks Rank #2. The company is slated to report first-quarter earnings results on May 14.

Anadarko Petroleum Corporation APC has an Earnings ESP of +12.96% and a Zacks Rank #3. The company is set to release first-quarter earnings results on May 1.

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