Devon Energy CorporationDVNNYSE
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Executive Summary
Latest Data: Dec 2024Energy•Oil & Gas Exploration & Production
$28.0BLarge Cap
A large-scale business, with solid profitability trading at a discount.
Key Investment Themes
Mature business (3% growth)
Solid 19% profitability
Attractive valuation (10.4x P/E)
Business Narrative
Devon Energy Corporation, an independent energy company, primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. It operates approximately 5,134 gross wells. Devon Energy Corporation was incorporated in 1971 and is headquartered in Oklahoma City, Oklahoma.
EnergyOil & Gas Exploration & Production
Cyclical
Revenue Mix
Single segment business
Bull Case
- +Solid profitability with room for margin expansion
Bear Case
- -Negative free cash flow may necessitate future capital raises
Company at a Glance
Business Performance
Key Highlights
Positive Signals
- Healthy profit margins demonstrating pricing power
- Attractive valuation for a profitable business
Watch Areas
- Negative free cash flow - burning cash
- Trading 31% above 5-year average valuation
Financial Health
Liquidity
Watch
Current Ratio1.04
1.0-2.0 = Adequate
Cash & Equivalents$846M
Leverage
Strong
Debt / Equity0.63
<1.0 = Low leverage
Interest Coverage9.40x
≥5x = Comfortable
Efficiency
Watch
Return on Equity19.9%
≥15% = Excellent
Return on Capital10.8%
8-15% = Fair
Valuation Assessment
Market Cap
$28.0B
Large Cap
P/E (TTM)
10.4x
Discounted
vs 5Y avg: 8.0x (+31%)
P/S (TTM)
1.7x
Discounted
vs 5Y avg: 1.7x (-5%)
EV/EBITDA
4.5x
Discounted
vs 5Y avg: 4.8x
(-4%)
(-4%)
P/E Historical Range (5Y)
Min: 6.7xAvg: 8.0xNow: 10.4xMax: 10.5x
P/S Historical Range (5Y)
Min: 1.3xAvg: 1.7xNow: 1.7xMax: 2.1x
EV/EBITDA Historical Range (5Y)
Min: 3.9xAvg: 4.8xNow: 4.5xMax: 6.2x
Valuation Corridor
CHEAP
FCF Yield
10.8%
vs Cost of Capital ~8.0% = Strong
P/E Corridor (5Y)10.4x
6.7xFair: 6.7x-9.7x10.5x
P/S Corridor (5Y)1.7x
1.3xFair: 1.4x-2.1x2.1x
EV/EBITDA Corridor (5Y)4.5x
3.9xFair: 3.9x-5.8x6.2x
Detailed Financials
Comprehensive financial statement data for deep analysis
| Metric | Dec 20 | Dec 21 | Dec 22 | Dec 23 | Dec 24 |
|---|---|---|---|---|---|
| Return on Equity | - | - | - | - | - |
| Return on Invested Capital | - | - | - | - | - |
| Gross Margin | -5.8% | 37.9%↑754.1% | 45.3%↑19.5% | 34.3%↓24.1% | 27.4%↓20.1% |
| Operating Margin | -13.6% | 35.0%↑358.4% | 43.3%↑23.5% | 31.7%↓26.8% | 24.2%↓23.5% |
| Net Margin | -61.7% | 20.2%↑132.8% | 30.3%↑49.9% | 24.7%↓18.4% | 18.6%↓25.0% |
| Earnings Yield | - | - | - | - | - |
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