Devon Energy Whiffs on Earnings

Seth Jayson, The Motley Fool
Updated

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

The 10-second takeaway
For the quarter ended June 30 (Q2), Devon Energy beat expectations on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue dropped significantly and GAAP earnings per share contracted significantly.


Gross margins improved, operating margins dropped, net margins contracted.

Revenue details
Devon Energy booked revenue of $2.56 billion. The three analysts polled by S&P Capital IQ predicted net sales of $2.46 billion on the same basis. GAAP reported sales were 8.7% lower than the prior-year quarter's $2.80 billion.

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 $0.55. The 24 earnings estimates compiled by S&P Capital IQ forecast $0.81 per share. GAAP EPS of $1.18 for Q2 were 82% lower than the prior-year quarter's $6.54 per share. (The prior-year quarter included $6.11 per share in earnings from discontinued operations.)

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 71.8%, 420 basis points better than the prior-year quarter. Operating margin was 34.3%, 1,860 basis points worse than the prior-year quarter. Net margin was 18.6%, 7,920 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $2.61 billion. On the bottom line, the average EPS estimate is $0.98.

Next year's average estimate for revenue is $10.34 billion. The average EPS estimate is $4.11.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 2,099 members rating the stock outperform and 52 members rating it underperform. Among 445 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 436 give Devon Energy a green thumbs-up, and nine 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 $83.80.

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The article Devon Energy Whiffs on Earnings originally appeared on Fool.com.

Seth Jaysonhad 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. 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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