How the Wheels Came off Devon Energy's Bus

Seth Jayson, The Motley Fool
Updated

Devon Energy (NYS: DVN) reported earnings May 2. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Devon Energy missed estimates on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share was unchanged.


Gross margins contracted, operating margins expanded, net margins shrank.

Revenue details
Devon Energy reported revenue of $2.50 billion. The four analysts polled by S&P Capital IQ expected revenue of $2.77 billion on the same basis. GAAP reported sales were 7.9% higher than the prior-year quarter's $2.32 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $1.05. The 23 earnings estimates compiled by S&P Capital IQ predicted $1.42 per share. GAAP EPS of $0.97 were the same as the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 66.4%, 90 basis points worse than the prior-year quarter. Operating margin was 28.4%, 150 basis points better than the prior-year quarter. Net margin was 15.7%, 230 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $2.78 billion. On the bottom line, the average EPS estimate is $1.43.

Next year's average estimate for revenue is $11.39 billion. The average EPS estimate is $6.19.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 2,072 members rating the stock outperform and 51 members rating it underperform. Among 477 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 470 give Devon Energy a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Devon Energy is outperform, with an average price target of $88.02.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Devon Energy. Motley Fool newsletter services have recommended buying shares of Devon Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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