$DVN Q3 2022 Earnings Report
$DVN Long
Devon Energy is a leading oil and gas producer in the U.S. Since 2019, they were able to beat every estimate and bring up their stock price from 20 Dollars to 60 Dollars. Their stock has also increased 25% from the start of 2022. Their previous earnings have also been very strong with good future outlooks and are expected to also be the same for this quarter. Another good indicator is the fact that Over the last 3 months, EPS estimates have seen 14 upward revisions with its EPS having increased by 300% as compared to last year. On July 2st, Devon Energy also announced that it has completed its previously announced acquisition of the leasehold interest and related assets of RimRock Oil and Gas for a total price of $865 million. This acquisition adds an extra position of 38,000 net acres for Devon to get oil from. Production from the acquired assets is expected to increase to an average of 20,000 Boe per day over the next year. The transaction also adds more than 100 highly economic undrilled inventory locations, making the company’s Williston Basin acquisition brunt in strong cash flows for several years. This will all be very good news for investors. High oil prices were also a very good thing for Devon Energy. They generated a record $1.3 billion of free cash flow during the period. That gave it an enormous amount of money to return to shareholders. Devon pays a quarterly dividend, which increased by 45%. The company's combined payment totaled $1.27 per share in the first quarter, up 27% from the fourth quarter. The company is using the other half of its free cash flow to further strengthen its balance sheet and repurchase stock. Devon expanded its share repurchase program by 25% to $2 billion after buying back $891 million of stock during the first quarter. Meanwhile, it ended the period with a $2.6 billion cash balance. Devon used some of the cash they had in June, agreeing to buy the assets of RimRock Oil and Gas for $865 million. The deal is immediately profitable to all its key financial metrics, including free cash flow per share. Because of that, Devon expects to increase its base dividend by 13% when it closes the deal which I'm expecting them to announce in their report. Disadvantages: I am expecting their price move to be around 10% which will be very risky if they missed the estimates. Adding onto this, their EPS is expected to almost double which shows how high the expectations are for this company and how easy it would be for them to miss it. Why this stock? Considering the fact that this company is in the oil industry, all of them are having very high revenues due to high oil prices. While the expectations from this company are high, they also have had many opportunities to meet them. They are one of the biggest oil producers in the U.S. so they will also be having one of the highest revenues, especially with their newly acquired deal. The stock price for the past 6 months: Past week +4.8% past month + 12% past 6 months +17% Initial reaction: Long Researched reaction: Long What the company is doing for its long-term plans: They bought a new oil company and were successfully able to acquire it. It is expected to immediately help them make a profit and more cash flow for the upcoming years.
Top Institutional Holders Holder Shares Date Reported % Out Value Vanguard Group, Inc. (The) 75,339,676 Mar 30, 2022 11.42% 4,603,254,088 Blackrock Inc. 54,981,392 Mar 30, 2022 8.33% 3,359,362,967 State Street Corporation 41,885,581 Mar 30, 2022 6.35% 2,559,208,935 FMR, LLC 20,939,981 Mar 30, 2022 3.17% 1,279,432,807 Price (T.Rowe) Associates Inc 17,508,587 Mar 30, 2022 2.65% 1,069,774,638 GQG Partners LLC 15,031,333 Mar 30, 2022 2.28% 918,414,423 Invesco Ltd. 13,622,352 Mar 30, 2022 2.06% 832,325,686 Geode Capital Management, LLC 12,942,426 Mar 30, 2022 1.96% 790,782,208 Bank of America Corporation 10,273,250 Mar 30, 2022 1.56% 627,695,559 Bank Of New York Mellon Corporation 9,827,964 Mar 30, 2022 1.49% 600,488,585 Ceo: Time: After market Estimate: +10%