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Based on Devon Energy Corporation's (NYSE:DVN) earnings update in March 2019, it seems that analyst forecasts are fairly bearish, with profits predicted to drop by 0.5% next year compared with the past 5-year average growth rate of 18%. Currently with a trailing-twelve-month profit of US$595m, the consensus growth rate suggests that earnings will drop to US$592m by 2020. Below is a brief commentary around Devon Energy's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
How will Devon Energy perform in the near future?
Over the next three years, it seems the consensus view of the 12 analysts covering DVN is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of DVN's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 21% based on the most recent earnings level of US$595m to the final forecast of US$1.1b by 2022. EPS reaches $2.44 in the final year of forecast compared to the current $1.2 EPS today. With a current profit margin of 5.7%, this movement will result in a margin of 12% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Devon Energy, I've compiled three key aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Devon Energy worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Devon Energy is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Devon Energy? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.