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Devon Energy (DVN) to Post Q4 Earnings: What's in Store?

Zacks Equity Research

Devon Energy Corporation DVN is expected to report fourth-quarter 2018 results on Feb 19, after market close. In the last reported quarter, the company delivered a positive earnings surprise of 46.51%.

Let’s see how things are shaping up prior to the earnings announcement.

Factors to Consider

Devon Energy estimates total fourth-quarter production from its assets within 515,000-543,000 Barrels of oil equivalent per day (Boe/d). The company is expected to benefit from higher level of activity in the Delaware Basin. The Zacks Consensus Estimate for fourth-quarter average daily oil production is 248,000 Boe/d, which reflects sequential growth of 5.5%.

Fourth-quarter earnings are likely to benefit from lower shares outstanding and cost-reduction initiatives undertaken by the company. However, fluctuation in oil prices during the fourth quarter might largely impact Devon Energy’s performance despite an expected increase in production levels.

The Zacks Consensus Estimate for fourth-quarter 2018 total revenues is pegged at $2,101 million, down 47.3% from the year-ago figure. Also, the consensus estimate for earnings is pegged at 34 cents per share, down 10.5% from the prior-year quarter.

Devon Energy Corporation Price and EPS Surprise

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

What Our Quantitative Model Predicts

Our proven model indicates that Devon Energy is unlikely to beat estimates in the upcoming quarterly results. A stock needs to have both a positive Earnings ESP (which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate) and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to surpass estimates. However, Devon Energy does not have the right mix.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP of the company is pegged at -6.35%.

Zacks Rank: Currently, Devon Energy carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Conversely, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

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

WPX Energy Inc. WPX is expected to release fourth-quarter results on Feb 21. It has an Earnings ESP of +3.80% and a Zacks Rank #3. You can the complete list of today’s Zacks #1 Rank stocks here.

Cheniere Energy, Inc. LNG is expected to release fourth-quarter results on Feb 26. It has an Earnings ESP of +84.51% and a Zacks Rank #3.
 
Southwestern Energy Company SWN is scheduled to announce fourth-quarter results on Feb 28. It has an Earnings ESP of +4.60% and a Zacks Rank #3.

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Southwestern Energy Company (SWN) : Free Stock Analysis Report
 
Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report
 
WPX Energy, Inc. (WPX) : Free Stock Analysis Report
 
Devon Energy Corporation (DVN) : Free Stock Analysis Report
 
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