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Gauging Devon Energy’s 3-Year-High Potential in 4Q17

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Gauging Devon Energy’s 3-Year-High Potential in 4Q17 PART 1 OF 6

Could Devon Energy’s Quarterly Profits Mark a 3-Year High?

Devon Energy’s 4Q17 net income estimates

Devon Energy (DVN) is set to report its 4Q17 and 2017 earnings on February 20, 2018, after the market closes. For 4Q17, excluding any one-time items, the current consensus net income estimate for Devon Energy is at ~$321 million.

On a YoY (year-over-year) basis, DVN is expected to report ~145% higher profits, compared with its 4Q16 adjusted net income of ~$131 million. On a sequential basis and excluding any one-time items, DVN’s 4Q17 consensus net income estimate is ~33% higher than its profit of ~$242 million in 3Q17.

Could Devon Energy’s Quarterly Profits Mark a 3-Year High?

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Based on the current consensus net income estimate, DVN is thus expected to report the highest profit since 4Q14. We’ll look at DVN’s 4Q17 EPS (earnings per share) estimates below.

By comparison, peer Marathon Oil (MRO), which is also the part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), is expecting a profit of ~$3 million in 4Q17, up from its loss of ~$83 million in 4Q16.

Devon Energy’s 4Q17 EPS estimates

For 4Q17, excluding any one-time items, Wall Street analysts’ current consensus EPS estimate for DVN is $0.63. On a YoY basis, Devon Energy’s 4Q17 current consensus EPS estimate is $0.38 higher than its 4Q16 adjusted EPS of $0.25.

Sequentially, DVN’s 4Q17 current consensus EPS estimate is higher than its EPS of $0.46 in 3Q17.

Devon Energy’s fiscal 2017 estimates

For fiscal 2017, excluding any one-time items, Wall Street analysts expect Devon Energy to report adjusted net income of ~$954 million, or $1.83 per share, up from around -$38 million, or -$0.13 per share, in 2016.

In 2017 overall, DVN was among the negatively performing upstream companies with a -9% return. DVN also underperformed the SPDR S&P Oil and Gas Exploration & Production ETF (XOP), which represents an index of stocks across the energy industry.

XOP has a ~79.3% exposure to the oil and gas exploration and production industry. XOP was down by ~8% in 2017. (For more on the best and worst upstream stock performers in 2017, check out Market Realist series The Best and Worst Upstream Companies by Year-to-Date Returns.)

In this series

Now that we’ve looked at DVN’s 4Q17 earnings expectations, it’s time to move to DVN’s revenue expectations, production guidance, cash flow estimates, and the odds that it can beat its EPS expectations.

Continue to the next part of this series (below) for a look at Devon Energy’s revenue growth.

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